As New York Attorney General Andrew Cuomo’s investigation continues, it’s becoming increasingly clear that Bank of America, and its CEO Ken Lewis, haven’t been straight on the subject of what they knew about those outlandish Merrill bonuses.
ABC News yesterday revealed details of the agreement signed by the two banks back in September, when they agreed that B of A would take over Merrill starting January 1. According to it sources, the agreement says that bonuses “shall be determined by the company (Merrill) in consultation with the parent (Bank of America).”
The network added that the two firms at first agreed that Merrill could hand out up to $5.8 billion. That figure was then added to “under $4 billion” after a conversation between Merrill CEO John Thain and a top B of A exec Steele Alphin, who’s a close Lewis confidant.
In other words, Bank of America had a clear role in working with Merrill to determine the amount of the bonuses awarded.
But that’s not at all how B of A has represented things.
When the Financial Times first broke (sub. req.) the bonus story last month, B of A told the paper:
Merrill Lynch was an independent company until January 1 2009. John Thain (Merrill’s chief executive) decided to pay year-end incentives in December as opposed to their normal date in January. B of A was informed of his decision.
And in his testimony before Congress earlier this month, Lewis said:
They were a public company until the first of the year, they had a separate board, separate compensation committee and we had no authority to tell them what to do, just urged them what to do.
It’s not clear whether that that outright contradicts the language of the agreement, as ABC has reported it. But whether or not the agreement gave B of A formal “authority” to set Merrill’s bonus levels, it certainly gave them an explicit role in the process (assuming ABC’s sources are rendering the wording of the agreement accurately). Which is a lot more than B of A’s few carefully crafted public statements on the subject have implied.
Thain, Lewis, and Alphin have all been subpoenaed by Cuomo (Thain has now “told all, says ABC), so you’ve got to think we’ll be getting to the bottom of this soon. And it doesn’t seem like it’ll look good for the increasingly embattled Lewis when we do.
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