Call for closer eye on airport finances
Oct 25 2008 by Adrian Pearson, The Journal
AIRPORT bosses could be forced to accept closer scrutiny of pay agreements as the backlash continues against former chief executive John Parkin’s reported £2m settlement.
South Tyneside Council is believed to be preparing to hand over the results of an independent review into the oversight arrangements which led to the former Newcastle Airport boss awarding himself a £6m bonus. Mr Parkin is believed to have secured a last-minute deal with the airport which will see him keep £2m – money that could have been handed back to the five Tyne and Wear authorities plus Northumberland and Durham.
The leaders of the seven authorities are believed to be privately furious at the way the settlement was handled, with many kept out of the loop over the last-minute negotiations.
Both South Tyneside leader Iain Malcolm and Durham boss Simon Henig act as non-executive directors at the airport, with Mr Malcolm among the original remuneration panel that okayed the huge bonus.
Sources have told The Journal there is growing resentment at their handling of the situation.
The seven councils own a 51% stake in the airport and many councillors privately say they feel Mr Parkin has walked away with public money.
A High Court case was due to begin on Wednesday in which the airport was claiming £8.5m from ex-boss John Parkin and the estate of former finance director Lars Friis, who died in 2006.
But the parties reached a confidential out-of-court settlement on Tuesday over the bonus payments made to the former directors after they remortgaged the airport in 2006 in a £163m deal.
It is understood that under the terms of the settlement Mr Parkin will get around £2m and the estate of Mr Friis is expected to get around £1.7m.
John Shipley, the Liberal Democrat leader of Newcastle City Council, said: “I think this has revealed governance weaknesses in our arrangements for managing the airport.
“It’s not clear who is responsible for making the decisions over this particular issue. The local authority board has very little power in practice.’’
Mr Shipley said a review is needed. “I think the scrutiny of airport business by the local authorities which have a majority shareholding needs to be improved.’’ Opposition leader Nick Forbes said: “There are serious questions which now need to be asked about how this happened.
“I would have thought that, given what has happened, the remuneration arrangements will be reviewed and greater responsibility handed to councillors accountable to the electorate.”
Mr Parkin is now chief executive at Leeds Bradford Airport. He was suspended in March 2007 over what were described as “certain personal contractual issues”. He resigned in May shortly before the legal action was revealed. The airport has refused to reveal any of the settlement details. Mr Parkin was not available for comment.
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