Vic: Fat cats to keep hefty bonuses for Christmas

AAP General News (Australia)
12-18-2009
Vic: Fat cats to keep hefty bonuses for Christmas

By Catherine Best

MELBOURNE, Dec 18 AAP - Victorian government fat cats who rewarded themselves with
more than a million dollars in bonuses while presiding over huge losses will keep their
cash for Christmas.

Treasurer John Lenders said executives at the Victorian Funds Management Corporation,
which manages the state's superannuation funds, would not be forced to repay their bonuses
because of contractual obligations.

Releasing the results of an investigation into the VFMC's pay policies on Friday, Mr
Lenders said the fund had breached government protocol by paying guaranteed bonuses that
were not linked to performance.

The investigation was ordered after it was revealed VFMC bureaucrats paid themselves
more than $1.2 million in bonuses last financial year despite losing more than $10 billion
in workers' super savings.

Investments fell from $41.3 billion to $31.1 billion in the two years to June 2009
under the crunch of the global financial crisis.

At the same time executive bonuses rose by 57 per cent last year and base salaries
grew by 42 per cent.

Former chief executive Justin Pascoe received a bonus of about $500,000 alone.

Mr Lenders said the investigation by Dr Michael Vertigan found the VFMC was applying
the industry standard in awarding guaranteed bonuses, against government policy.

"The government's perspective is quite clear, bonuses should be paid on performance
and the practice of a guaranteed bonus before performance is, from our perspective, unacceptable,"

he said.

"Contracts were signed with employees that had guaranteed bonuses in them, contracts
will obviously always be honoured."

Mr Lenders said all of Mr Vertigan's recommendations would be adopted and a new management
team had since been appointed.

The report has not been released publicly for privacy reasons.

Opposition treasury spokesman Kim Wells said the VFMC had lurched from crisis to crisis
since it was restructured by Premier John Brumby in his former role as treasurer.

He criticised the investigation for having "narrow" terms of reference and not examining
the fund's investment performance.

"Clearly this review is a whitewash and only about protecting John Brumby and John
Lenders," Mr Wells said.

"John Brumby cannot be trusted with taxpayers' investments and until there is a full
judicial inquiry into the VFMC investment performance Victorians will never know the truth."

Mr Lenders said the fund had performed better in the past few months and was eclipsing
benchmarks.

AAP cmb/pmu/srp

KEYWORD: VFMC

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