BBC Payouts 'Cronyism' Comes Under PAC Fire

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By Vasudevan Sridharan | December 16, 2013 4:59 PM EST

BBC’s ‘cronyism’ in payouts damages its international reputation, say MPs - (Reuters file photo)

The BBC's "cronyism" in granting large payouts to its outgoing senior executives has severely damaged its international reputation, a committee of senior MPs has said.

A report by parliament's Public Accounts Committee (PAC) rebuked the BBC Trust, the governing body of the corporation, for paying outgoing senior staff significantly more than was stipulated in their contracts.

Earlier it emerged that nearly 150 outgoing BBC staff were paid £25m - £2m more than their overall contractual entitlement. The PAC has said the matter is a "serious breakdown" in the "dysfunctional" BBC.

Some of the justifications put forth by the corporation in handling payments "far exceeding" contractual obligations were "extraordinary", the MPs found.

"There was a failure at the most senior levels of the BBC to challenge the actual payments and prevailing culture, in which cronyism was a factor that allowed for the liberal use of other people's money," the PAC said in a statement.

The PAC report has come after two rounds of hearing attended by top BBC figures - Lord Chris Patten, the BBC Trust's chairman, Mark Thompson, and current director general Tony Hall.

The Chairwoman of the PAC Margaret Hodge said: "The BBC is the world's leading public sector broadcaster, but recent revelations over severance payments to departing senior managers have put its reputation at risk.

"One hundred and fifty senior managers between them received payments totalling £25m. We were dismayed to find that many of these individuals received 'sweeteners' in their severance packages that were far larger than the sums to which they were contractually entitled."

Hodge said the BBC Trust was "sitting on its hands" while the payouts were taking place.

Thompson Defends Payments

Thompson, who is presently the chief executive of the New York Times, has defended the payments. He said in a statement: "The members of the PAC are entitled to criticise the result, but the decision to make the settlement was made in an entirely proper and transparent way.

"Despite some inflammatory language in the PAC report, there is absolutely no evidence of any wrongdoing by anyone at the BBC in relation to these severance payments."

A BBC spokesperson said: "One of Tony Hall's first acts on his appointment was to cap payments at £150,000 - the committee welcomed his decision. There needs to be absolute clarity over the responsibilities of the Trust and the BBC executive and we have already acted and announced a range of changes to deliver that."

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