Jim Allister on Lawrence MacKenzie’s golden handshake

Jim Allister has an interesting set of questions over Lawrence MacKenzie’s severance package which has been picked up on by the News Letter.

The questions essentially revolve around why if MacKenzie resigned of his own volition, he received over £90,000. As Allister says:

“what sort of a remarkable contract had he which entitled him to a handsome severance package even when he himself choose to go? Does this mean that if the crisis had never occurred and he merely decided to leave, perhaps for an even higher paid job, he could have pocketed a severance package? If so, it is a truly remarkable and foolhardy contract, for which the paying public deserve an explanation.”

Allister suggests that had MacKenzie been dismissed for gross misconduct he would not have been entitled to a payout. In addition now even if the enquiry fins MacKenzie culpable for many of the problems in NI Water there is no sanction against him

As Allister says at the end: “These are some of the questions which cry out for answer, but with an Assembly where no Opposition is permitted, they will go unanswered.”

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  • Mick Fealty

    There is a more obvious question than that Turgon. Who gave him this ‘notice’ of which he speaks? You don’t get notice when you resign. You get given notice when you are sacked. And we know that Mr MacKenzie was not sacked.

    So, Conor, Pauric (whoever is in charge there), why the golden handshake?

  • SimpsonInBangor

    He has raised a perfectly valid question, but it’s not like he has the exclusivity on it, most people have been baffled at what appears to be an extraordinary contract that allows a senior exec to resign (and place a significant replacement recruitment cost on the employer) and pocket 6 months salary.

  • Cynic2

    …and when has it been normal to pay the employee’s tax advisor’s fees.

    What exactly did that £3000 buy.Its simple… anything over 30K is taxed at marginal rate or were NIW paying to advise and employee how to avoid tax? And why?

    And why did NIW pay for HIS legal fees?

  • Pigeon Toes

    Mick

    You must give the company notice when when you resign. In this case it was six months on either side. The Board wanted him gone immediately, and thus the pay out and compromise agreement, where the employee must have independent legal advice, which the employer normally pays for. (Not sure about the tax advice though).

    Again, it seems that MacKenzie played the Board and the Minister, with an offer of resignation , butt in the full knowledge that he would land a big pay out, and I cant really fault him for *that*.

  • Pigeon Toes

    Meant also to say that MacKenzie was well aware of the six months notice required, and that a resignation in those terms would have been obviously unacceptable, in the circumstances.

    There is no way there could have been any announcement of his resignation , followed by “but it will be in 6 months time when he’s worked his notice”.

    Notice periods are contractually binding on both sides.

  • NI Water’s (non-) answer to Belfast jj’s FOI requests on the subject dovetail with Jim A’s questions:

    http://tinyurl.com/6dvl8v2

  • malairt

    Touch of disenguenuity here as we all know he didn’t resign voluntarily. He was pushed, maybe gently and unattributably, but he was pushed. And he wouldn’t have gone quietly if he hadn’t been assured of his contractual entitlement to 6 months pay either by working his notice or getting 6 months pay in lieu of notice; hence the midnight negotiations with the Board. Actually, he wouldn’t want to work the 6 months so it was a payoff or a fight.

    I don’t think it’s an extraordinary contract, I think it’s a perfectly normal one. The fudge is that he “resigned” but got a payoff anyway.

    NIW has long used the carrot of paying individual’s legal fees to encourage dissenters to sign compromise agreements. Which is of course a contract to keep shtum about the terms reached.

    The tax advice paynent is a funny one though. All I can think of is that as he didn’t reach his 2 years service, he can’t leave his pension contributions invested in the NIW pension scheme. Maybe the advice was how to move the contribitions to another scheme whilst avoiding being taxed on the way.

  • Cynic2

    Why do we always want them to go quietly? This is the civil service way that means that incompetence is never recognised. If it was made clear to him that if he didnt go an investigation for incompetence or misconduct would have made him rapidly reconsider his options

  • SimpsonInBangor

    Malairt – it is an extraordinary contract, at least if Connor Murphy was being honest about what happened. He clearly stated that under his contract conditions, when resigning, the CEO was entitled to 6 months pay upon resigning.

    How is that not extraordinary?

    I accept that he was most likely asked to resign, but the fact remains, this was a payment which would have been paid to him resigning under any conditions, with or without a crisis. Had everything been going well at NIW, Mr McKenzie could have left them at any time, placing a significant burden on NIW and wandered off with a minimum of 6 months pay. To me, that is just astounding.

  • Pigeon Toes

    No if he had worked his six months notice he would have received nothing… The fact that the Board/DRD wanted shot of him immediately meant that NIW were the contract breakers in not allowing him to work his full notice.

  • SimpsonInBangor

    Sorry, I thought it was played that it was his choice to go immediately.

  • malairt

    Would you go? Larry had many faults but being scared of a fight isn’t one of them. He’d have enjoyed fighting accusations of incompetence in front of the PAC and RDC, watching his political master and his Civil Service sidekicks wriggle and squirm. As he’s never going to work in NI again why would he care? And who runs NI Water in the meantime? Him?

    If you push him aside he’ll sue for constructive dismissal; if you sack him he’ll sue for unfair dismissal; you can’t make him redundant because the job will still exist – you can’t have an Executive Chairman again because the Minister fired the previous one.

    I think the compromise that’s been reached is probably the best in the circumstances. Certainly it’s in some ways quite cheap in terms of saving the huge legal and labour costs involved in reaching what would perhaps be a more satisfactory conclusion morally.

  • dennis the menace

    so jim allister wanted Mr Mackenzie to work his 6 months notice…now theres a voter winner jim.

  • SimpsonInBangor

    I have no doubt this was the cheapest option. As for the best option for the tax payer, I think it would have been best for him to stay and fight. I think he would have exposed some shocking political interference and incompetence which may in the long run have seen some improvement to the way NIW is run.

  • Pigeon Toes

    “I think he would have exposed some shocking political interference and incompetence which may in the long run have seen some improvement to the way NIW is run.”

    Given that he was possibly complicit, I doubt that very much.

  • PoliticsNI has already got hold of one FOI in relation to “NIwater respond to FOI request Re the Big Fat payoff for Laurence Mackenzie”

    http://politicsni.wordpress.com/2011/01/24/niwater-respond-to-foi-request-re-the-big-fat-payoff-for-laurence-mackenzie/

  • malairt

    @ SimpsonInBangor

    Can you point me to where the Minister has said that MacKenzie was due 6 months pay for resigning? I’m just wondering if there’s some very careful words being used here.

  • Had the Board and the Minister accepted the MacKenzie offer of resignation a year ago would NIW have made a better fist of the extreme weather crisis and be in a better managed position now?

  • Pigeon Toes

    “Actually, he wouldn’t want to work the 6 months so it was a payoff or a fight.”

    Bet ye he didn’t tell them that 😀

  • joeCanuck

    Allister is being somewhat disingenuous. There is nothing uncommon about the arrangement. A company is having difficulties. It sees an available CEO who did well in his previous job so they hire him. Things continue to go downhill and the Board realizes that they made a mistake. They can’t fire him for cause because there are no specific targets in his contract. He has x years left. The Board are worried that things will only get worse in that time unless they get a CEO who understands the particular business. So they buy out his remaining contract.
    End of story.

  • Nunoftheabove

    joeCanuck

    Quite right. This is textbook demagogy of the type that Allister learned while a (still as unpleasant and inconsequential) DUP ankle-biter. The man’s a QC for the love of jaysus.

    As for some of the other feedback here….sheeesh, some of these parochial NI civil service types and their boring, careerist, very comfortably off trades union representatives seem yawningly estranged from how the real world economy works. Get used to it, people…..

  • “Things continue to go downhill”

    Joe, I thought things were improving in the months prior to his arrival – despite the tug-of-war between Murphy and the Treasury over additional water charges.

    Presumably MacKenzie’s autocratic management style will have been well known in the small world that is NI. We still don’t know what direction, if any, may have been given to him at that September 2, 2009 meeting, a meeting that included Murphy and Priestly. He appears to have been pushing back against too hasty an approach to bringing in the changes requested by the regulator. The pressure vessel seems to have blown in November, 2009, and the ‘sensitive souls’, may have been other directors, the Board or both.

    As for the Board, do the interim NEDs have much of a clue about a utility, let alone a water utility?

  • Pigeon Toes

    Elsewhere they roll out the old “financial difficulties redundancy” chestnut.

    Seemingly that can bite the employers arse,and indeed the concerned public.
    http://www.bbc.co.uk/news/uk-northern-ireland-12268155

    Was his “independent” review perhaps too “independent”?

    Or in other parlance s*selective*?

  • Pigeon Toes

    In any case this was all known about a fortnight ago…

    http://www.newsletter.co.uk/news/Murphy-agrees-to-NIW-payoff.6687498.jp

    Wonder if the agreement included payment for benefits such as ahem his company Blackberry, car,laptop and indeed pension.

    I’m assuming the pension payments were included, as otherwise he *may* have a course of action…

  • Pigeon Toes

    As pointed out on Sunday the Public Appointments Commissioner has raised concerns about the interim NEDs.

    http://www.newsletter.co.uk/news/Watchdog-queries-NIW-appointments.6702447.jp

  • Pigeon Toes

    “The commissioner told the News Letter: “The process of even bringing the records sent to us into some form of order took around a fortnight. We had to go back to the department to see if they could provide the missing evidence and only some of it could be produced.”

    Last week the department’s most senior official, Malcolm McKibbin, apologised to a Stormont committee after saying the department had no trace of a pre water crisis memo from NI Water, only for it to be found that day.”

    http://www.newsletter.co.uk/news/Watchdog-queries-NIW-appointments.6702447.jp

    A DRD spokeswoman said: “In this case it was agreed, in consultation with the commissioner, that the approach taken would be an exception to the code. However, the minister has noted the commissioner’s comments and provided an assurance that future appointments processes will be handled as normal in accordance with the Commissioner for Public Appointments NI Code.”

  • I’ve looked at the 2009/10 NIW annual report:

    “On 11 March 2010 the Minister removed the Chairman, Chris Mellor and three Non-Executive Directors, namely Ruth Thompson, John Ballard and Declan Gormley.”

    Would that have been before or just after the meeting between DRD officials and the Commissioner for Public Appointments who were scheduled to meet between 2 and 3 pm the same day?

    Officials and/or the Minister were able to act promptly in this ’emergency’. He’d allegedly only received/seen the ‘independent’ report at the end of February/beginning of March and on March 3 an email went from Patterson’s office to the Commissioner requesting a meeting after March 9.

  • “the minister has noted the commissioner’s comments”

    A one page ‘review’ from the Commissioner sheds little light on the shenanigans surrounding the appointment of the interim NEDs. Can we expect a grilling of the Minister, DRD officials and the Commissioner by the CRD?

  • Upgrading my laptop and Mr Bad Example by Warren Zevon put me in mind of Lawrence

  • Nunoftheabove

    Moochin

    Good shout squire, I was listening to this on my iPod last night but McK didnd’t come to mind (best not say who did…) but I know where you’re at.

    “…I’ll live to be a hundred and go down in infamy”