As the country and politicians bayed for his blood, or at least part of his pension, Sir Fred Goodwin tried to present himself as an injured party last night.

The man who brought Royal Bank of Scotland to the brink of collapse suddenly drew attention to the financial sacrifices that he made when taking his leave.

It seems like an age since that traumatic weekend of October 11-12, when the Government prepared to take control of his bank. Ministers wanted him out. On the evening of Saturday, October 11, the City Minister — Lord Myners — met Sir Tom McKillop, who was then the bank’s chairman, and Bob Scott, the senior non-executive director.

According to Treasury sources, Lord Myners insisted that it would be inappropriate for Sir Fred to receive a 12-month notice payoff or share options. Lord Myners was told by Sir Tom that Sir Fred would walk away with a pension pot valued at £16.9 million, worth, it later emerged, £693,000 a year. He says he was told that this was a contractual obligation. The deal went through. Quite whom Lord Myners told about the details is not clear.

But they have come back to haunt him in recent days.

Fast forward to Wednesday night. As The Times and other newspapers were about to reveal the massive scale of the latest bank bailout, the BBC was leaked the news that Sir Fred was receiving an enormous pension, far greater than most people thought. The timing seemed suspicious.

It appeared like an attempt to distract attention from the huge demands about to be placed on the taxpayer yet again. But there was another motive. RBS’s annual report is only days away, and it would reveal the full details of the deal thrown together when Sir Fred was shown the door.

Someone seems to have decided that it would be wise to get them into the open. What is more, as the Treasury combed through RBS’s books assessing its toxic and other assets, another inconvenient fact appears to have emerged in the past few days.

The so-called contractual agreement that allowed Sir Fred’s pension pot to double on early retirement may not have been obligatory, as Lord Myners claims to have been told. It was discretionary.

On Wednesday afternoon Alistair Darling asked Lord Myners to call Sir Fred and urge him to surrender some of his pension because the public “would not comprehend” such an award, given the circumstances of the bank and the fact that he — Fred the Shred — had pushed through the disastrous takeover of ABN Amro that had nearly killed it. Sir Fred agreed to reflect on the matter.

Mr Darling went on the Radio 4 Today programme and asserted that the Government had only just found out that the former RBS board may have had the discretion to refuse the pension deal. On that basis, UKfi, representing the taxpayer’s share in the banks, was trying to discover whether there were legal grounds for clawing it back. The Chancellor left the impression that the Government knew little about the deal, certainly not about the £16 million.

“When I found out, I was very clear that we had to go back to RBS to ask: who negotiated this; why did they negotiate it; and, importantly, whether or not they can have grounds for trying to claw some of it back,” Mr Darling said.

He added: “I think people will find it very difficult to understand how you can get paid £650,000 a year for the rest of your life when . . . [you] look at the state RBS is in at the moment.”

Stephen Hester, chief executive of RBS, gave a different slant. He told the same programme: “The arrangements for my predecessor’s departure were negotiated directly between past directors of this board and the Government and him.”

By 11.30am, when the Chancellor went to the Commons, his position had hardened. The agreement was neither negotiated by the Government nor approved by it. The pension arrangements were a matter between the employee and the board.

“What we did know last autumn was that we were told there was a contractual agreement between the board of the bank and Sir Fred. Because we had previously understood that his pension arrangements were an unavoidable contractual commitment, it was only very recently that we became aware that the decision of the previous board to allow Sir Fred to take early retirement had the effect of increasing his pension entitlement and that that might have been a discretioanry choice.”

Treasury officials made plain that it was exploring all legal avenues to see whether the pension, or some of it, could be clawed back. If the board was not aware of the position, the decision might be challenged.

By 3.45pm, at the second Downing Street briefing of the day, the picture changed further. It then became clear beyond doubt that the only thing learnt in recent days was that the pension award might be discretionary.

The Prime Minister’s spokesman made plain that the Government had been aware of the scale of the award, but did not believe it could do anything about it.

The Treasury confirmed: “The figure for the pension was known. We did not know it was optional.”

Until that point the Government had been making the running. Then, in a dramatic development, “friends of Sir Fred” were letting it be known that he felt his deal had been approved by ministers.

The minister concerned was swiftly revealed to be Lord Myners. “Myners was fully aware that Fred was taking early retirement and what that meant,” a source close to Sir Fred said.

Sir Philip Hampton, chairman of RBS, confirmed that the Government was fully aware of the negotations. “All the terms of Fred’s departure were agreed by the chairman, the senior independent director, the Government and Fred,” he said.

Sir Philip also revealed that he had recently asked Sir Fred to forgo some of his pension voluntarily. “He said he’d think about it . . . I haven’t heard back.”

But Sir Fred was to answer that question. He told Lord Myners in a letter brimming with irritation that he had been surprised to find details of his pension and of their conversation on Wednesday being put into the public domain just hours later.

He pointed out that he had volun-tarily waived his 12 months’ notice, a year’s salary, last October, as well as some share-related awards. He then asserted that the subject of his pension had been specifically raised with Lord Myners. He writes: “. . . and you indicated you were aware of my entitlement and that no further ‘gestures’ would be required.

“To voluntarily accept a reduction in a pension entitlement which has been built up over many years and in other employments in adition to RBS is not warranted.”

He added: “While I suspect that you will not now agree with it, I hope you can understand my rationale for declining your request to voluntarily reduce my pension entitlement.”

During the day some friends of Sir Fred accused ministers of knifing him. Last night he repaid the compliment.

Downing Street insisted that Lord Myners’s position was not under threat and that he had not known at the time that the pension award appeared to be discretionary.

Sporting losses

50% to be cut from RBS’s £200m sports sponsorship budget within two years

90% to be cut from hospitality budget, ending lavish entertaining at events such as Wimbledon, the Open Championship, Six Nations and Formula One

£2m Annual amount paid to RBS global ambassadors including Zara Phillips and Andy Murray, left, Sachin Tendulkar, Jack Nicklaus and Sir Jackie Stewart.

They face cuts in fees. The £20m for the RBS Six Nations is safe

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