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MPs slam 'dysfunctional' BBC over executives pay

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A culture of "cronyism" and "failure" at the highest levels of the BBC, led to executives receiving larger pay-offs than they deserved, a committee of senior MPs has said.

The Public Accounts Committee (PAC) said the BBC risked its reputation with the "extraordinary" payments that were given to departing executives.

The BBC has come under fire for paying more than £25 million to 150 outgoing executives between 2009 and 2012, which included £2 million more than executives were entitled to.

Among the excessive payouts given to senior staff were £470,000 to former director-general George Entwistle after only 54 days in the job and £680,000 to former chief operating officer Caroline Thomson.

Deputy director general Mark Byford was given a golden goodbye of £949,000.

The committee heard evidence from outgoing HR boss Lucy Adams, current director-general Tony Hall and former director-general Mark Thompson.

Adams told MPs in September that she occasionally offered financial "sweeteners" to push senior executives "out of the door".

Since the enquiry, the BBC has capped payments for departing staff to £150,000.

'Kick in the teeth'

Margaret Hodge, chair of the PAC, said she was "dismayed" to find many individuals receiving sweeteners in their severance packages, which were far larger than what they were contractually entitled to.

"There was evidently a failure at the highest levels of the BBC to challenge payments to senior managers and what appears to have been a culture of cronyism that allowed for the liberal use of licence fee payers' money," she said.

"While the executive was handing out these inflated severance payments, the BBC Trust was sitting on its hands, failing to fulfil one of its primary duties, which is to ensure the rigorous stewardship of public money."

Hodge said she was pleased the Lord Hall acknowledged the BBC had "lost the plot" in its management of severance payments. She also welcomed the introduction of the cap.

Hodge said the large payments were a "kick in the teeth" to the thousands of journalists and creative talents at the BBC.

Complete overhaul

As part of its efforts to cut costs, the BBC has significantly reduced the number of senior managers it employs, from 624 in March 2010 to 445 in March 2013.

The PAC said it was "unacceptable" for the BBC, or any other public body, to give departing senior managers severance payments that far exceeded contractual entitlements.

The recommendations laid out by the PAC include reminding staff they are all individually responsible for protecting public money and challenging wasteful practices. The PAC also recommended a complete overhaul of the BBC Executive and the BBC Trust to change the way they conduct, record communicate decisions.