The Goodwin pension questions
Having looked at the relevant part of Royal Bank's accounts, it does not seem to me that the bank was obliged to pay Sir Fred Goodwin a £650,000 pension with immediate effect.
The rules of its pension fund are that it was "allowed" to pay an early enhanced pension to a member who "retires early at the request of the company".
But it was not obliged to do so.
Also, and very relevantly, if the company had dismissed Sir Fred, rather than asking him to retire, then again he wouldn't have been eligible for these generous benefits.
So why did the board of RBS feel it was proper to give a £650,000 pension for life to the chief executive that many blame for the colossal mess at RBS?
And did all board directors know about and approve the arrangement?
It would be odd if they didn't know, because Sir Fred has his own "funded, non-registered" pension arrangement outside of the main pension scheme. And the bank would probably have had to transfer an estimated £8m or so into that personal scheme to lift it to the required amount to finance the £650,000 payments (the total value of Sir Fred's pot, as I disclosed yesterday, is £16m).
Then of course there's the question of what the Government knew about all this.
Stephen Hester, the new chief executive, told me this morning that the Government approved the pension settlement with Sir Fred - which is potentially very embarrassing for the Chancellor and the Prime Minister.
I am told that the Treasury did indeed know last autumn that Sir Fred's pension pot had increased to a breathtaking £16m.
But it seems that ministers and officials believed at the time that Royal Bank had been obliged to make the payment. They claim to be gobsmacked to have since learned that the bank had discretion over whether to pay it.
They also point out that last autumn, when Sir Fred's departure terms were agreed, the state wasn't yet a shareholder in the bank. And they therefore relied on Royal Bank's chairman and non-executives to make sure Sir Fred received the minimum to which he was legally entitled.
Some may say that - if this was how it transpired - the Treasury was perhaps being naïve.
And if it were to turn out that any minister knew that Royal Bank could have said no to Sir Fred's bumper pension, well that would not be great for the image of a government which insists that it detests payments to executives for failure.
UPDATE, 15:09PM: I have learned the following material facts about how Sir Fred's pension payment was agreed.
The initial decision was taken - I am told - over the fraught weekend in October when ministers made clear that they wanted Sir Fred out of the bank.
The deal with Sir Fred was done by the bank's then chairman, Sir Tom Mckillop, in consultation with the senior non-executive director of the time, Bob Scott.
I am told the City minister, Lord Myners, was told about the pensions arrangement.
What's unclear is whether Myners was aware of the cost of the deal or that the bank wasn't obliged to pay the full £650,000 to Sir Fred with immediate effect.
The full board wasn't told about the pension settlement till January.
UPDATE, 16:52PM: Here's yet more on this tale of who agreed to give a £650,000 pension for life to the chief executive blamed by many for the colossal mess at RBS.
The initial decision was taken over the fraught weekend in October when the Treasury was bailing out our banks for the first time.
On the evening of Saturday 11 October, the City minister - Lord Myners - met Royal Bank's then chairman, Sir Tom McKillop, and the senior non-executive director of the time, Bob Scott.
Lord Myners urged that Goodwin be removed from his post - but was told by Sir Tom that the board had already agreed to do so.
The City minister told Sir Tom that it would be inappropriate for Sir Fred to receive a termination bonus or to be able to exercise his share options.
However, in the presence of a senior lawyer, Lord Myners was informed by Sir Tom that Sir Fred would walk away with a pension pot valued at £16m - and that this was a contractual obligation.
Lord Myners felt he couldn't challenge an arrangement that therefore seemed obligatory - though presumably he now wishes that he had done.
The question that now arises is what did Sir Tom mean by "a contractual obligation" - since it is now clear that the board had discretion not to give Sir Fred £650,000 per annum aged just 50.
UPDATE, 17:17PM: I am being faxed a copy of a letter from Goodwin to Myners which claims that Myners agreed the pension should be kept out of the departure negotiations. Sir Fred is not planning to volunteer to return any of his pension pot.
UPDATE, 17:30: In Sir Fred's letter to Lord Myners, Sir Fred says that he made substantial financial sacrifices when leaving Royal Bank. And he insists that Lord Myners told two senior Royal bank directors that further "gestures" would not be required, which was interpreted as meaning that Lord Myners was sanctioning the pension settlement.
Here is the letter [PDF].