Russell:"the matter is closed"

Sir George is quizzed over Camelot's concessions on BBC Radio 4

Camelot Directors Compromise Over Bonus Row

The row over so-called Camelot "fat-cats" has ended in compromise with directors backing away from resignation and agreeing to pay at least part of their bonuses to charity.

In another move to placate Government anger, the Lottery operators announced plans to plough interest earned on unclaimed prizes into charities instead of the company coffers.

That could mean a total of £24 million extra going to good causes, Camelot chairman Sir George Russell said.

In a letter to the Heritage Secretary, Chris Smith, he said: "The issues on bonus and prize-fund interest arise from the outstanding success of the Lottery. I believe we can work together to maintain and build on this success for the benefit of the Good Causes."

Mr Smith, whose fury at Camelot at one point threatened to prompt a walk-out by the directors, welcomed the announcement, even though it was unclear how much of their bonuses the executives concerned would be donating to charity.

"The precise amount will be a matter for personal decision, but I am confident that there will be substantial amounts going to charity as a result of this", he said. "I believe this is an exercise in good faith by Camelot. I am pleased we have been able to reach sensible agreement".

"I now regard the matter as closed. The Government will press on with work on its plans to make the National Lottery more a People's Lottery," he added.

Sir George insisted Camelot had not brought any pressure to bear on the directors to hand over part of their bonuses.

Smith: welcomes the agreement

Chris Smith explains the Camelot compromise to BBC Radio 4

"There was no pressure from the board because the board is quite adamant they are not going to order anybody to had over money they have earned under contractual obligations," he told BBC Radio 4's World at One .

He refused to say how much the directors would be contributing to charity. "I don't think they have agreed specifically what they are paying but that is their own private business. It is not the business of Camelot or its board," he said.

"They volunteered this, to take the cork out of a bottle to allow the Lottery to move forward again, rather than just be stuck and perhaps moving to a decline situation."

Mr Smith said he was satisfied the donations would be more than just a token gesture."It is a commitment made in good faith and I have every confidence that it will be a substantial amount," he told the same programme.

He said the process would be monitored by Camelot's independent remuneration committee which should ensure it was a genuine offer.

Labour had made clear before and after the General Election that it wanted to see a not-for-profit lottery after the Camelot franchise ended in 2001. Mr Smith said he wanted agreement with Camelot over the situation before then.

The National Lottery Charities Board, one of the five bodies which distribute Lottery cash, welcomed the news that interest on the prize short-fall would go to the "good causes" fund.

"Currently the board can only fund one in five of the applications we receive," said a spokeswoman. "As more money comes to the good causes we will be able to fund more of the excellent applications made to us by UK charities."