Universities who paid out €8m in unauthorised payments to senior staff will not be penalised or have to pay the money back to the State, despite them being "bang out of line," it has emerged.
Senior staff in all seven universities were awarded payments without proper approval, and after the scandal first broke both the Government and the Higher Education Authority (HEA) stated they wanted the money paid back.
However, it has emerged that a deal has been done which will see not one cent paid back or deducted from their future state allocations -- but they must ensure equivalent amounts of money are directed to "student services".
UCD was the worst offender with unauthorised payments of €3.58m, followed by UCC (€1.53m); Trinity College (€1.38m); NUI Galway (€578,000); University of Limerick (€448,000); NUI Maynooth (€272,000); and DCU (€53,000).
The allowances were paid between 2005 and 2011 without HEA approval, despite legislation that stipulates its approval must be sought.
The embarrassing climbdown by Education Minister Ruairi Quinn and the HEA was revealed in an answer to a parliamentary question from Fianna Fail's Education spokesman Brendan Smith.
Yesterday, Mr Smith said: "This is totally unacceptable. There was a flagrant breach of the rules and there should be penalties. The Government should be taking stronger action to deal with these payments."
Difficulty in recouping the monies arose when it emerged that unauthorised payments were given to staff as part of their contracts, which meant they could not be easily clawed back.
Defending the decision not to impose a financial penalty on the colleges, Mr Quinn's spokeswoman said he was "greatly angered" when he first learned of the unauthorised payments. The decision not to inflict a financial penalty on the universities was driven by a desire not to hit frontline student services, she said.
"The universities were bang out of line, but we didn't want a situation whereby a penalty would impact on students. There was a total failure of government and this happened on the watch of the previous government. We want to ensure this never happens again," the spokeswoman said.
She said Mr Quinn retained confidence in the HEA despite its failure to spot the payments over several years.
For its part, the HEA said it is making arrangements with the colleges to ensure the value of the unauthorised allowances will be used toward student services.
"We wish to ensure that the universities are penalised for their actions while at the same time ensuring that frontline services are not affected by such a penalty," a spokes-man for the HEA said.
The allowances were a means of providing additional pay to high-level staff.
Latest figures show 1,237 employees in the third-level sector earned more than €100,000 last year.
More than 200 of these earned between €150,000 and €200,000 or more.
Journalist: Daniel McConnell