Revealed: Newcastle Airport scandal that could cost us millions
Nov 27 2010 by Andy Hughes, The Journal
NORTH East taxpayers could bear the brunt of a huge debt worth hundreds of millions of pounds after two airport bosses were paid sky-high bonuses for simply taking out a loan, The Journal can reveal.
Newcastle International Airport Ltd, which is partly-owned by the region’s seven councils, had agreed a £377m mortgage as part of a refinancing deal with the Royal Bank of Scotland in 2006.
But documents seen by The Journal reveal that the then executive directors, John Parkin and Lars Friis, had it written into their contracts that they received a percentage of the loan amount as a bonus.
Former chief executive Mr Parkin was due to receive 2% of the mortgage and former finance director Mr Friis was to receive 1%.
The decision to allow the bonuses was made by a remuneration committee of five people – but the decision was not made public.
The airport company is now suing the legal advisers who drafted the confidential contract in an attempt to claw back some of the millions paid to the two executive directors, who no longer work for the airport.
Fears are growing it will be left to the region’s seven local authorities, known as LA7, to clear much of the airport debt, believed to be around £325m, before it refinances again in 2013.
Nick Brown, former Government minister for the North East and Newcastle East MP, said: “This is one of the great contemporary scandals. The behaviour of everyone involved is indefensible.”
Chi Onwurah, MP for Newcastle Central, said: “Newcastle Airport is a critical part of the region’s economic infrastructure, and half owned by council tax payers.
“So it has to be managed transparently and in the interests of the whole region.
“Paying multi-million pound bonuses and over-leveraging the assets would certainly be grave mismanagement, but attempting to cover it up worse still.”
Mr Parkin, now chief executive of Leeds Bradford Airport, was suspended after details emerged of the controversial £8.5m bonus package paid to him and Mr Friis, who has since died. The airport launched legal action against the pair but an out-of-court settlement was reached in October 2008 and all parties entered into a confidentiality agreement.
