Britain to Examine Why BBC Severance Payments Exceeded Contract Terms

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LONDON -- When it comes to the BBC and funding that is mostly provided by Britons who pay a fee to watch television, there is no end to the argument, or the accounting.

Next Monday, the fight will continue when the House of Commons Public Accounts Committee will hold new hearings on the way the British Broadcasting Corporation gave large severance payments to senior editors in an effort to reduce its budget.

The payments were made largely when Mark Thompson, now the president and chief executive of The New York Times Company, was the director general of the BBC. Mr. Thompson ran the BBC from 2004 to 2012.

He will testify at the hearings, which follow a June report and a report published Wednesday by the National Audit Office. The auditors found that between 2009 and December 2012, the BBC paid more severance than it was contractually obliged to give to 22 senior managers out of 150 who left, at a total extra cost of £1.4 million, or about $2.2 million.

Two executives, the audit said, were given large severance payments even though they had already found new jobs. The decisions were "poor value for money, putting public trust in the BBC at risk," the audit office said, blaming "weak governance arrangements" that included insufficient oversight.

The audit office found no evidence of criminal wrongdoing, but said the BBC had breached its own policy guidelines "too often without good reason."

The BBC was trying to reach targets for budget and staffing cuts without compromising its enormous journalistic output. From 2005 until the end of 2012, the BBC cut its staff by more than 10 percent, or more than 2,000 full-time jobs, to 16,858.

Mr. Thompson, who declined to be interviewed, said in a statement in July that he had received approval for the key severance payments from an executive remuneration committee and the BBC Trust, an oversight panel, which had been "fully informed in advance."

He said he had "made sure that the trust were aware of and understood all potentially contentious issues." He responded after the chairman of the trust, Chris Patten, testified to his "shock and dismay" that some payments exceeded contractual obligations.

By 2010, Mr. Thompson has said, he had already cut 100 of 700 top jobs with more to come and had reduced pensions, salaries and benefits, including his own. He has argued that the severance payments were in line with contractual obligations and the needs of the BBC at the time.

Britons feel possessive about the BBC, and one of the national credos is "value for money," especially true in a period of economic tightening. Britons pay £145.50 annually per household, or around $226, to watch color television on any device, including computers, and these payments last year provided the BBC £3.7 billion, or about $5.8 billion, an amount that is supplemented by commercial activities but represents 72 percent of the corporation's income of £5.1 billion (around $8 billion).

So any suggestion that money was spent carelessly is politically delicate.

In hearings before the Public Accounts Committee in July, Mr. Patten acted surprised.

He said that only two specific cases had been referred to the trust and that he had been told by the director general that they were being settled on contractual terms. Later, "it was a question of shock and dismay for us how many had been beyond contractual," he said. "The amount of control at the center over what was going on was simply not good enough."

Tony Hall, the current BBC director general, appearing with Mr. Patten, said: "We got this wrong -- we were overpaying. The fault lies with us. Culturally, we lost the plot." Mr. Hall added: "There was not enough grip at the center of the organization. Things were devolved far too low down."

Mr. Thompson responded in his statement that the trust had been told "in writing and orally" about the severance payments, including the one to his deputy, Mark Byford, whose job was eliminated, and about the savings that would incur. No one objected, Mr. Thompson said, and he looked forward to testifying in person.

Mr. Byford was made redundant in October 2010 after 31 years with the BBC but remained on the staff with pay for eight months before receiving severance of nearly £1 million (about $1.55 million): a year's salary of £474,500 and the same again in lieu of notice. The main issue is whether Mr. Byford should have worked through his period of notice instead, with the eight months counting against his severance package.

"In any other media organization if you had to move a senior executive swiftly, these kinds of deals would not be exceptional by any means," said Richard Sambrook, a former BBC journalist and executive who teaches at Cardiff University. "But the BBC is judged as if it were part of the civil service. It's expected to deliver services and be a big global media player but judged by a completely different set of criteria. And that's why you have this tension at the heart of it."

Mr. Sambrook said Mr. Thompson had been under considerable pressure to quickly reduce the number of senior managers. If the BBC is to compete and get the best talent, he said, "then they have to accept that sometimes people have to be paid off, and actually this isn't an exorbitant payoff by media industry standards by any means."

The issue of large payments to departing top executives is not unusual. At the Times Company, Mr. Thompson's predecessor, Janet L. Robinson, received a compensation package worth about $24 million when she suddenly retired at the end of 2011.

Others are more critical of the BBC's actions. Tim Luckhurst, a former BBC journalist and former editor of The Scotsman who teaches journalism at the University of Kent, said the size of the severance seemed intended to buy future loyalty and discretion while discussing the BBC's policies and problems, including the scandal involving sexual abuse accusations against some of the BBC's performers, including Jimmy Savile.

"If you are giving really premium rewards beyond your contractual obligation to colleagues," Mr. Luckhurst said, "you are creating a personal debt of gratitude and a network of people who will always be extremely loyal to you, and I think one of the reasons the BBC did this under Mark's leadership was that it was extremely concerned about external criticism by former staff."

Lucy Adams, the BBC's human resources director, accused by one legislator of presiding over "corporate fraud and cronyism," said on Aug. 29 that she would leave next March and not receive a severance payment. Mr. Patten has said he will not seek another term as chairman of the trust.

world

This article originally appeared in The New York Times.


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