Taoiseach Brian Cowen went over the head of Tánaiste Mary Coughlan and ordered the withdrawal of a statement of support of the Fás board in order to save the government from collapse, the Sunday Tribune has learned.
It is understood Cowen intervened in the Fás controversy after Green leader John Gormley went to the Taoiseach and warned his party wouldn't countenance a public backing of the board of Fás from Coughlan.
The decision to withdraw Coughlan's statement completely undermined the board, however Cowen told Fás chairman Peter McLoone that it was "a matter of political expediency".
"Are you going to let the government fall?" Cowen was reported to have remarked to McLoone just a few days before he was due to appear on RTÉ's This Week programme to defend the board's handling of the Fás controversy last month.
McLoone, who is leader of the public service union Impact, last week said he would tender his resignation when the Fás board meets next week, but added he could not speak for other board members.
Last month, in the wake of the latest report on overspending in the beleaguered state jobs agency, Coughlan announced she would introduce legislation to change the make-up of the board. But in an email to the board, Coughlan stated she was prepared to issue a statement supporting the board's handling of the controversy and the contents of this statement were conveyed to the board.
When McLoone then sought confirmation of Coughlan's statement he was told it had been withdrawn.
Several board members are furious at how they feel they have been scapegoated by the government when it was the board and the internal audit team that had revealed the extent of the mismanagement of funds over the last six years.
Board member Niall Saul told the Sunday Tribune the board is being pressurised to resign by the government when all they were doing was enacting the same government policy.
Saul instanced an issue that arose three years ago when Micheál Martin was enterprise minister. The government representative on the Fás board said the government wanted Fás to hold a jobs fair in Cork.
When pressed by another board member as to why Fás should spend so much money to hold a jobs fair in Cork, the government representative replied: "It's in the minister's constituency".
Saul also said the board was similarly pressurised to proceed with 'government policy' and decentralise to Birr in Co Offaly, even though most board members opposed the move. This aborted move to Birr cost Fás millions, but the board was forced to back it because it was government policy, said Saul.
Saul also pointed out that the state's spending watch dog, the Comptroller and Auditor General, had conducted annual audits of Fás, but had failed over five or six years to pick up any issues going on with Greg Craig and corporate affairs. That was unearthed by the Fás internal audit team, he added. "I am prepared to take responsibility, but different standards are being applied to this board who only met 11 times a year. Why aren't heads rolling over decentralisation, the Cork jobs fair, the Comptroller and Auditor General," said Saul, who at the weekend had yet to decide whether to follow McLoone and resign next week.
The Tánaiste yesterday defended her decision to approve a generous pension package for Molloy without seeking legal advice.
Speaking about the controversy on RTÉ news last night, she said: "There was no necessity to get legal advice. And furthermore, as the Taoiseach said this morning, these [pension payments] were commensurate with what he would have been entitled to in the normal circumstances, if I had on the instruction of the board, removed him from his position.
In addition, justice minister Dermot Ahern said yesterday that the threat of a protracted legal action was one that was best avoided and he defended the Tánaiste's handling of the affair.
"The fact is that at the particular time the board spent over a day discussing this issue, obviously they had certain information on which they based their judgment on... there was a pressure to get Mr Molloy to move on. So a judgment had to be made," he said.
Labour Party leader Eamon Gilmore last night said the Taoiseach should consider whether the Tánaiste was the best person to hold such a senior portfolio. Gilmore said that what had occurred in the past 24 hours in relation to Fás called into question Coughlan's ability. Although he stopped short of calling on Coughlan to resign, Gilmore said her handling of the Fás issue had been "very much all over the place" and "less than sure-footed".