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Gentoo director who received excessive severance payment named
A director who received an excessive severance payment triggering a downgrade of one of the North’s largest housing associations has been named in court documents.
Steve Lanaghan, the former assistant chief executive at Gentoo, was said to have received the early release of pension funds and double the three months’ pay he was contractually obliged.
Gentoo, which was downgraded to a non-compliant G3 rating in October last year for the payments, has said they were made without board approval and is pursuing legal action to recover them.
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The details were revealed in an employment tribunal judgement brought by Kevin Kelly, a former Gentoo employee whose application for its finance director vacancy was rejected in 2016.
Mr Kelly alleged in the hearing that the payments were “concealed” in Gentoo’s 2015/16 financial statements due to “unlawful accounting practices” – an allegation Gentoo “strenuously denies”.
Gentoo’s accounts for 2016/17 show its highest-paid member of staff in 2015/16 received more than £660,000. This figure was not reported in the original 2015/16 accounts.
The highest payment made in 2016/17 was more than £400,000.
Mr Lanaghan received the early release of his pension in 2015/16, according to the tribunal judgement. He left the organisation in 2016/17.
The judgement said: “[Louise] Bassett [executive director of corporate services and former HR director] instructed the respondent [Gentoo] to self-report to the regulator that Mr Lanaghan was wrongly paid six months in lieu of notice rather than three months.”
It also describes “the arrangements made to allow the early release of pension for Mr Lanaghan in 2015/16”.
Gentoo confirmed to Inside Housing the payment was not approved by the board following the regulator’s judgment.
Gentoo remains engaged in a legal claim against Mr Lanaghan to recover the money, but said “it could be some time before any decision is made regarding the issue of civil court proceedings”.
On the 2015/16 accounts, it said the figures on director’s emoluments were limited to salary, an approach which it said “was consistent with other housing associations” and accountancy practice.
It added: “In 2017, the top accounting firms decided that pension contributions and pension strain on the fund payments should be shown in directors’ emoluments in the accounts.
“The advice of our auditors, KPMG, was that we should restate the 2015/16 directors’ emoluments in the 2016/17 accounts to reflect this change in accounting practice, a step also taken by many other housing associations. We strenuously deny that this practice was ‘unlawful’ and this was confirmed in writing by KPMG.”
Mr Lanaghan was previously named in a BBC News article, but had not been officially confirmed as the recipient.
In the tribunal, heard in July, Mr Kelly claimed his application was rejected because of the likelihood that he would blow the whistle on the payments. This was rejected at the first instance, but the tribunal agreed that some evidence could be reheard following the revelations about Mr Lanaghan.
However, the case was then resolved by the parties and the judgment was released by the court’s and tribunals service on 23 November.
Mr Lanaghan declined to comment. He has previously denied all wrongdoing.
