Bank Bonus Showdown: Just Who Approved $3.6 Billion Payout?

BofA CEO Ken Lewis deplaning corporate jet to face NY Attorney General.

February 26, 2009, 5:06 PM

February 26, 2009— -- Bank of America President Ken Lewis was confronted by the lawyers for New York Attorney General Anthony Cuomo this afternoon over his statements that he had "no authority" over $3.6 billion in bonuses paid to Merrill Lynch executives last December.

Investigators say corporate documents obtained by the attorney general suggest otherwise.

Lewis arrived at the attorney general's offices after a flight from Charlotte, N.C., on a $50 million G-5 luxury corporate jet, one of nine corporate jets owned by the giant bank.

A spokesperson for the Bank of America told ABC News: "This was an important meeting which we felt justified the use of corporate aircraft for timing and efficiency." The spokesperson refused to answer questions regarding the cost of the travel or any plans for the company to scale back on their use of private aircraft.

Since receiving $45 billion in federal bailout money, Bank of America announced it would sell three of the jets.

The immediate issue for Lewis, say investigators, is whether he has told "the whole story" about the huge bonuses paid shortly before Merrill Lynch merged with Bank of America.

Appearing before Congress earlier this month, Lewis said he had "no authority" over the bonuses.

The corporate merger documents, however, say the bonuses would be awarded "in consultation" with Bank of America.

Lawyers for the attorney general are expected to confront Lewis over his congressional statements, which were not made under oath.

The Bank of America/Merrill Lynch merger documents, read to ABC News, state the bonuses "may be awarded at levels that do not exceed $5.8 billion."

Two Bank of American officials met with Merrill Lynch president John Thain to get him to lower the total bonus amount to $3.6 billion, according to investigators.

Thain Met With Cuomo's Office This Week

Thain testified before Cuomo's investigators earlier this week and provided a list of bonus recipients and amounts.

Investigators say 696 employees received bonuses of $1 million or more.

Four top employees were given bonuses totaling $121 million.

Thain, in his first deposition Feb. 19, had initially refused to answer questions regarding the bonuses, according to a partial transcript of that session. On Monday, he was ordered to reappear after the attorney general's office sought and received a court order compelling him to answer the questions.

The bonuses became a subject of the investigation into Merrill's merger with Bank of America by Cuomo's office after the attorney general raised whether the two banks -- which together received about $45 billion in taxpayer dollars -- worked together to arrange the early bonus plan just weeks before the merger was completed

The bonus package, called the Variable Incentive Compensation Package, provoked outrage when it was revealed that Merrill Lynch lost $25 billion in 2008.

This post has been updated.

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