BNFL's 'expensive failures' earn £1m payoffs from taxpayer

Friday, December 12, 2008

Individual payments of up to £1m have been handed out from the public purse as a "golden goodbye" to directors at the loss-making nuclear holding group BNFL, according to the latest set of accounts.

David Bonser, executive director for human resources and a key figure in the development of BNFL's troubled Thorp reprocessing plant, received £1,046,350 compensation for ending his employment last month. That was on top of an annual salary and bonuses worth £577,112 for the 12 months to March 31, 2008.

Two other directors left with well over £1m in combined salaries, bonuses and golden goodbyes as the company that once presided over a sprawling empire of nuclear assets was wound down.

Mike Parker, the chief executive of BNFL, earned £1.4m in salary and bonuses in the year to March 31 and has since received a £526,100 payout to compensate for his loss of office last month. John Edwards, the group finance director who earned £897,540 in 2007-08, received a severance payment of £420,467.

The group's assets included the £2.3bn Thorp plant, which deals with used fuel, and the £490m Sellafield Mox plant (SMP), built to recycle fuel.

Thorp has been closed since 2005, when a leak was discovered, costing BNFL subsidiary BNG Sellafield a £500,000 fine. SMP has produced only 5.2 tonnes since it opened in 2001, after promising it would produce 120 tonnes a year.

Greenpeace said last night that these expensive failures made a nonsense of managers obtaining special leaving rewards. "Payouts of this size to directors of the company that oversaw the failed Thorp and SMP plants, which cost the taxpayers millions, will shock many people given today's economic climate," said Jean McSorley, a nuclear consultant to Greenpeace.

The accounts, which were drawn up in August but have yet to be formally published, also show that BNFL reported pre-tax losses of £125m for the 12 months to March 31, compared with a profit of £2.3bn for the year before. Most of the change was the result of a huge write-down in goodwill and businesses being sold off.

All three managers received a year's notice that their jobs would be ending and the BNFL accounts, which are overseen by the shareholder executive at the Department of Business, Enterprise and Regulatory Reform, include a statement saying "the compensation for loss of employment is in line with severance terms for all employees of the company".

Bonser's end-of-service payment came just as he was appointed chairman of the UK arm of Westinghouse, a nuclear engineering business that was sold by BNFL to Toshiba and is now vying to have its reactor designs adopted in Britain for a new generation of power plants.

Paul Brown, a fellow of Wolfson College, Cambridge, who produced a research paper entitled Voodoo Economics about the nuclear industry, said he was surprised by Bonser's payment.

"David Bonser was the man responsible for setting up Thorp, which has been the greatest single failure on the whole Sellafield complex. That he should be rewarded with a million pounds of tax payers' money is a travesty."

BNFL, once known as British Nuclear Fuels Ltd, was established in 1971 and along with the reprocessing plants was responsible for the Magnox power businesses, the Westinghouse operation and the Urenco fuel-making business.

It was reorganised in 2005 and renamed British Nuclear Group Sellafield but a subsidiary was set up and retained the name British Nuclear Fuels plc. The decommissioning business was taken on by the newly established Nuclear Decommissioning Authority and the remaining businesses such as Westinghouse sold off.

An overview of the 2007-08 financial year that goes alongside the accounts describes BNFL as a "highly influential and well-respected company" that had successfully transferred its businesses to new owners in an orderly way in line with the government's objectives for a resurgent and competitive market place.

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