Trust shares confidential letter on Byford's pay-off

Mark Byford Mark Byford's severance package was referred to as 'Project Silver' in a letter just made public

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A confidential document has been given to the National Audit Office about former deputy DG Mark Byford's proposed severance package, which was above the BBC's contractual obligations.

It had not previously been submitted because it referred to Byford by the code name 'Silver' and wasn't caught by an electronic trawl for evidence.

The confidential letter titled 'Project Silver', made public on Wednesday, was sent to the NAO by Lord Patten. The BBC Trust chairman judges that the new evidence brought to light doesn't change any conclusions drawn in the initial NAO report, published in July.

In a covering note, he says: 'I do not think that the facts as now established contradict the conclusions in the NAO's published report that the Trust was informed of the headline costs of Mark Byford's package, was told that this would be on the basis of contractual terms but had no role in the approval process.'

The newly released letter - sent from former DG Mark Thompson to the Trust on September 17 2010 - outlines the financial burden of closing the deputy DG post. In the document, he refers repeatedly to Byford as 'Silver' and says directly: 'Neither Lucy [Adams, HR director] nor I believe it would be possible to conclude an amicable settlement on minimum terms'.

It's never made clear if 'minimum terms' refers to the BBC's minimum contractual obligations.

'Dilemma'

Thompson also adds detail about the difficult BBC position: 'So the dilemma we are wrestling with is between trying to deal fairly with someone who has devoted many years of service to the BBC (and who is being realistic about pension augmentation in particular) as against numbers which - even at the contractual minimum - might cause us difficulty when they become public.'

In a subsequent note that was made public, Thompson writes to Michael Lyons, then chairman of the Trust, to outline the total cost of Byford's redundancy and that of director of MC&A Sharon Baylay.

In the note from October 7 2010, he writes: 'These redundancies will take place on the basis of the terms set out in their contracts and WITHOUT any form of pension augmentation.'

Byford left the BBC with 12 months' salary, 12 months' pay in lieu of notice and £73,000 for unused leave before 2004 (a total of £949,000).

Baylay also received the maximum pay in lieu of notice even though the redundancy was determined several months earlier. She left with a total of £394,638 for being in service two years.

Lieu of notice

At the time of their departure, it was 'custom and practice' to pay senior managers a maximum 12 months in lieu of notice. In a Public Accounts Committee meeting in July, chair Margaret Hodge described this as 'a fiddle to increase the amount of money people walked out the door with'.

Lord Patten and trustee Anthony Fry faced hostile questioning at the PAC meeting, particularly over how much they knew about Byford's generous severance package.

Both told PAC that Thompson had made assurances about Byford's pay-off being within contractual terms. To back up this claim, they referred to the note sent to Lyons in October 2010.

Fry added that there was a 'disconnect' between the note and what the NAO report eventually revealed.

Thompson is due to come before PAC on Monday, to answer specific questions relating to senior manager pay-offs when he was head of the BBC.

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