BBC pay-offs to senior staff have breached the corporation's own guidelines by being over-generous and have "put public trust at risk", the National Audit Office (NAO) said.
The NAO, which has been reviewing redundancy and severance payments to senior figures, concluded they have given "poor value for money".
In a three-year period up to December, the BBC spent £25 million on severance payments for 150 high-ranking staff, according to a report. In almost a quarter of the cases reviewed by the NAO, the BBC paid out more than the staff were entitled to under their contracts - which it said cost licence-payers upwards of £1 million. In two cases the BBC knew that the outgoing staff had already found new employment before they had left.
Concerns about payments have been heightened in recent months following the decision to award former BBC director-general George Entwistle twice the money to which he was entitled after resigning from his job after only 54 days. And there has been disquiet from the Commons Public Accounts Committee about a redundancy payment to former chief operating officer Caroline Thomson last year who left with a £670,000 pay-off - more than twice her £330,000 salary. The committee has already suggested the money was effectively paid to "compensate" her for missing out on the director-general job.
The BBC's new director-general, Tony Hall, said he accepted the NAO's conclusions and added: "The level of some of these payments was wrong." He said: "It is important to understand what was happening here. The BBC was trying to get its senior management headcount down, and it succeeded, reducing it from 640 to 445. As the NAO acknowledges, we have saved £10 million over the period studied by the report and will keep on making savings every year. But we have to accept that we achieved our objectives in the wrong way. I believe the BBC lost its way on payments in recent years. I have already said that we will be capping severance payments at £150,000 and we have now begun to improve our processes. These payments were from another era and we are putting a stop to them."
The NAO said the decisions to make payments higher than staff were entitled had until recently "been subject to insufficient challenge and oversight". The report revealed Mr Entwistle's final pay-off of £475,000 had also included a further three weeks' salary after the date of his resignation. His payment had previously been reported to be £450,000. In its conclusions, the NAO says: "The BBC has breached its own policies on severance too often without good reason. This has resulted in payments that have not served the best interests of licence fee-payers. Weak governance arrangements have led to payments that exceeded contractual entitlements and put public trust at risk. The severance payments for senior BBC managers have, therefore, provided poor value for money for licence fee-payers."
Anthony Fry, who chairs the BBC Trust's finance committee said: "Although the BBC has achieved significant savings in its senior manager pay bill, some of the NAO's conclusions are deeply worrying, particularly the failure to follow agreed severance policies in a number of cases as a result of weak governance from the BBC Executive in the past. Such practices are unacceptable, and I have no doubt that they will, quite rightly, be met with considerable dismay by licence fee payers and staff alike."
A total of 228 senior managers left the corporation up to December 2012, 150 of whom received severance payments. However, there were still 436 senior managers continuing to work at the BBC in February. The report notes that the BBC has estimated it has made £35 million in savings as a result of senior manager redundancies - £10 million more than the £25 million it has paid out - and these will increase over time. The average severance payment for senior managers over the three-year period was £164,200.
Gerry Morrissey, general secretary of the broadcasting union Bectu, said: "It is quite clear that a number of senior managers were given excessive payments to leave the organisation, which cannot be justified. However, this should not be seen as an opportunity to attack payments made to production staff and journalists who are leaving the BBC through no fault of their own."
Culture Secretary Maria Miller said: "Every publicly funded organisation must be able to justify every penny of taxpayers' money they spend, and even more so in these tough economic times. There is huge public interest in the BBC, and the NAO has exposed a culture of pay-offs that simply cannot be justified. The report shines a light on a culture at the BBC where individuals received payments that went beyond the already very generous terms of their contract. I welcome the fact that the BBC is looking at future payments - a move which this report suggests is long overdue."