April 7 2024

What should in-house General Counsels do when they become aware that their organisation – or senior people within it – are, or may be, behaving unlawfully?

Back in the USA

It is not a new question.

In 1991 the head of Salomon Brothers’ Government Trading Desk, Paul Mozer, deliberately breached the rules at 5 separate auctions of US Treasury bonds between December 1990 and May 1991, falsified trading records then lied to supervisors as US regulators started to ask questions. What made the firm’s behaviour worse was that, despite the GC, Donald Feuerstein, the Chair, John Gutfreund, and two other senior executives (John Meriwether and Thomas Strauss) being told of Mozer’s behaviour during the February auction in April 1991, despite them agreeing that his conduct should be reported to the US Treasury, they did nothing. It was only in August that the Treasury was informed and, even then, the firm failed to say that top executives had known for months but failed to act, a delay described as “inexplicable and inexcusable” by Salomon Brothers’ new Chair, Warren Buffet. 3 of those 4 executives had resigned by then but not the GC who had repeatedly told senior management that they must act but had failed to make any reports himself. Eventually, he too resigned.

The report into this matter – and the conduct of the GC – was one of the first things I read when joining Salomon’s Legal Department a few years later. It was made crystal clear that, when it came to legal issues, especially reporting to authorities, lawyers could not, should not satisfy themselves with telling others that something had to be done but had an obligation to ensure that it was done and, if necessary, by them. Lawyers were not just there to advise others. Sometimes they had to act too.

And now?

Some 30 years later that lesson still needs learning, judging by what we are learning from the never-ending revelations of the Post Office Inquiry and, lately, the release of numerous recordings, involving conversations between the independent external investigators, Second Sight, and the Post Office’s General Counsels, Susan Crichton and, later Chris Aujard. Much of the focus has been on what they show about Paula Vennells’ knowledge of Horizon’s failings and its consequences for subpostmasters, contrary to what she later claimed to a Parliamentary Select Committee.

Worse is what they show about the response of the Post Office’s General Counsel, their most senior lawyer and the person who should, if they understand their responsibilities properly, be ensuring the company complies with the law even if this adversely impacts its commercial interests or is deeply embarrassing (whether for the organisation or him personally of his team).

The latest recording, released by ITV, is worth dissecting. The new GC, Chris Aujard, was told by Second Sight, that his organisation may have pressured subpostmasters improperly into pleading guilty to serious criminal offences on the basis of false or non-existent evidence, failed to carry out investigations and misled the court.

“It’s that serious.” he is told.

He responds:

“My focus now is on dealing with each case as it comes through. So yeah, the macro, macro issues are another pot. They’re not in my pot. They belong to other parts of the organisation. I can feed through some of the thoughts on this call into that pot.”

And

“… I will absolutely relay on to the right people.”

What is this garbage management-speak? He was the chief lawyer. He was one of the “right people“. He had an overriding duty to ensure that the organisation of which he was the GC did not behave unlawfully. He had an overriding duty to the court to ensure that it is not misled, whether expressly or by omission, a duty overriding any other duty to his client. If there was – as he was clearly told – the slightest chance of his organisation misleading a court during litigation and/or in criminal prosecutions, he should have been all over this. Not wittering about “pots”, “macro issues” and dumping his responsibilities on others like some latter-day Pontius Pilate. “Not my job” is not what a GC should be saying when told of unlawful, potentially criminal behaviour. A GC is not a passer-by at the scene of an accident.

What should have happened

He should have informed the full Board, including the non-executive directors, of what he’d been told and what needed to be done. Did he? If he was either not listened to or told to do nothing or that it was none of his business, he should have resigned and told the legal regulatory authorities, the courts and the government why. Of course, this would have required a sense of professionalism, some ethical sense and courage. Were these qualities more widespread in public and commercial life, our organisations would be in a much better state than they are.

What does this show us?

What this vignette (and the other recently released recordings) suggest is a Board lacking the necessary curiosity alerting them to what was happening at the executive level. Or, just as likely, a Board not wanting to know, making that clear and thereby stifling any chance of independent ethical action by managers from the executive level down.

It also suggests a legal department unwilling or unable to take full and proper responsibility for the company’s investigations team and the consequent prosecutions. What sort of an investigations team the Post Office actually had and whether it really did any investigations in the proper sense of that word will be for another time. (Spoiler: no.)

It is worth noting that this approach did not start with Mr Aujard. In 2010 the Post Office’s Head of Criminal Law, Rob Wilson, when asked for his views on having an independent investigation into Horizon said:

“To continue prosecuting alleged offenders knowing that there is an ongoing investigation to determine the veracity of Horizon could also be detrimental to the reputation of my team.” (Emphasis added.)

His full response (see here) shows someone more concerned with adverse publicity, the Post Office’s reputation and damage to the business, as well as to his own team. His team’s reputation simply should not have been a factor when determining whether or not to have an independent investigation into a system whose data was being relied on in criminal prosecutions. In any event, it took another 2 years before such an investigation was commissioned.

What this recording also suggests is an organisation splitting up its management of – and responsibility for (“They’re not in my pot.”) – its response to what was being alleged in a way which weakened the GC’s authority, made it harder for any one senior person or department to see the extent of what was happening (or easier to turn a blind eye and disclaim responsibility, depending on how cynical you’re feeling) and easier to treat the constituent parts of the scandal as problems to be managed away rather than fully understood and properly handled.

Bad stuff happens

Employees will often break the rules, whether deliberately or by mistake. Sometimes they will try and cover up what they have done. Or say nothing, hoping the problem will go away. Or lie when asked. There is nothing unusual about this. But that is precisely why we have gatekeepers – in-house lawyers – to act when others don’t, when others are foolish or malicious or afraid to act. It is why the best test of an organisation’s culture is how it – its senior managers, its lawyers – respond when bad stuff happens, when things go wrong, when misfeasance, misconduct or just plain stupid mistakes come to light.

The Williams Inquiry resumes its hearings on 9 April with the interviews of a number of senior Post Office lawyers. It will be interesting to hear from them how they understood the scope of their role, whether they understood that they might sometimes be in a position where their duty to the court was in conflict with what their client wanted and what they should do in such a situation. And whether what they actually did was in line with the high standards which ought to be expected of them.

This is something all lawyers, especially in-house ones, have to have an answer to, even if you hope never to be put in such a position. An “I can’t remember.” or an “I see no ships” answer will not be good enough.

January 4 2024

In episode 1 of Mr Bates vs The Post Office, there is a scene in which Alan Bates’ wife tells him she has a job.

“Teaching?” he replies.

“No. Cleaning houses.”

They need the money to make ends meet. They have lost their savings and business.

He gives her a look – of love, gratitude & a hint of humiliation at what they’ve been reduced to and then – quietly but with determination – he says:

“I’ll get those bastards.”

It is a wonderful piece of writing and sublime, subtle acting, especially by Toby Jones. It captures both the humiliation inflicted on innocent people by the powerful and the former’s determination not to be ground down. It is about the subpostmasters. But like all good drama, including that based on real life, it shows something universal.

Those sentiments have been echoed before. They will, I am sorry to say, be repeated in the future. Because abuse of power is hard to eradicate. The powerful have no interest in doing so; the powerless find it hard to do so.

This abuse of power by the state or its organs has happened so many times before. This story about the Post Office is not an appalling one-off. It is only the latest of a series of scandals going back at least 60 years.

In so many ways, the misbehaviours exhibited by the Post Office are similar to those exhibited by the Coal Board in the Aberfan tragedy, by the police in Hillsborough, by the government in the blood contamination scandal and Windrush, by the NHS in numerous medical scandals, and in many others.

See https://www.cyclefree.co.uk/the-price-of-indifference/.

The substance may be different but the misbehaviours by the powerful are so very similar:

– the refusal to listen to concerns
– the lies and cover ups
– the stingy callous approach to apologies and compensation
– the refusal to accept responsibility
– the avoidance of accountability.

There are two behaviours above all which are repeated. The first is the arrogance of indispensability.

It is this which leads to the abuse of power which lies at the heart of the actions taken. The Post Office’s conduct over nearly two decades might best be described as a rampage of extortion with menaces, based on lies.

It is enabled by those who allow such organisations to behave as if they are unchallengeable. As if they are “Too Big To Fail” or “Too Important To Fail“.

It is abetted by such organisations being put by voters on a pedestal of some kind or trusted too blindly: the Post Office as a twinkly, trusted “Postman Pat-At-The-Heart-of-The-Community” who could not possibly do any wrong. Or the NHS. Or the police – who have often confused the vital importance of policing as a function with the importance themselves as an institution so making it much harder to challenge bad policing.

In this, these organisations have echoed the stance taken by much of the City in its pre-financial crash glory days, when it gave the impression that it was so lucrative and therefore indispensable that it could do whatever it wanted with little real regard for the rules. It was an attitude enabled by politicians so delighted at the large tax revenues that they ignored the dangers of the overmighty barons of that time.

And the second?

It is an indifference to ordinary people, to the human consequences of misbehaviour, to the impact on others.

This quote from the above article explains so much about the Post Office’s and government’s obduracy about putting this right.

“There is the indifference which can be one of the causes of a problem. But what is often worse is the indifference shown to victims after problems have arisen. It is hard to understand the callousness of some decisions. Perhaps it is made easier by forgetting or ignoring those who are affected.

It feels like indifference to those on the receiving end. But perhaps its impulse is less the effect on the victims but more a desire to save face by those responsible……

It harms an institution’s self-image and, often, of senior people within it. “We got it wrong.” is hard to say. If “we get it wrong” what sort of a “we” are we, really?”Avoiding the shame of having to admit that your actions or inactions have been responsible for the suffering of others is what drives this defensiveness and indifference.”

• You see this in the evidence given by Post Office staff in the Williams Inquiry.
• You see it in the evidence given by the Post Office’s internal and external lawyers.
• You see it in the response at Board level, which also manages to suggest that criticisms of its staff are somehow unacceptable and unfair and unkind, as if they were the true victims. The combination of arrogance and narcissism must be hard to bear for those who really have suffered.
• You see it in the response by the government. It gives the impression of being a random passer-by at the scene of accident caused by complete strangers ineffectually using a hankie to mop up blood and expecting huge thanks. In reality, it is the owner and funder of the Post Office and without its say-so and money the Post Office would cease to exist overnight.

What you also see in those other cases is how those responsible for harm done to others got away with it, were not made accountable, suffered no adverse consequences.

We are seeing that in this case too. Look at all the senior people in the period between 2000 – 2012 (when Paula Vennells was appointed CEO) when prosecutions were happening despite the knowledge that senior people in the Post Office, Fujitsu and government knew about Horizon’s difficulties and deficiencies. Look at how they have flourished in well paid jobs with their time in charge of an organisation at the heart of the worst miscarriage of justice in English history airbrushed away or ignored.

It feels as if this is more of the same: the powerful abusing the powerless. Because they can. Because they know they are untouchable. Because even if disciplinary or civil or criminal proceedings are brought, those Post Office prosecutors, investigators and lawyers, external lawyers and Fujitsu employees and others will benefit from the protections and rights and compliance with the rules and a fair trial which the Post Office denied the subpostmasters. We know why they should get those protections. But to those who have suffered as a result of their actions, it must feel like yet another unfairness to be added to those they’ve already endured, another example of how the powerful benefit at the expense of the powerless.

Will those who did wrong be held to account this time?

What about those others who set up the structures or took decisions or made laws which enabled this scandal to happen: the Ministers, the civil servants, the Law Commission, the MPs?

What sort of accountability should they face?

January 1 2024

This evening there is the first episode of a four part drama – Mr Bates vs The Post Office. It is a must see, if only in the hope that it will bring home to a wider public the scale and human impact of what has rightly been called the worst miscarriage of justice in English legal history. It is to be hoped that such public interest might put pressure on politicians to put right – and without further delay – matters which are – or should be – an affront to the conscience of the British state.

It is shaming to see from the evidence given during the statutory public inquiry headed by Sir Wyn Williams how so many from my own profession behaved so unprofessionally, incompetently and potentially worse, both during the events which are the subject of the Inquiry and during the Inquiry itself.

If there is one thing to learn from it, it should be a reminder that practising law or carrying out investigations without any understanding of the ethical underpinning of one’s work and the necessity of ensuring that this informs everything you do is wrong. This is not what true professionalism requires. The question is never “Can I do this?“. But “Should I?“.

It is correct to say that this is the worst miscarriage of justice. But this description underplays the nature of the scandal. In reality, this is not just a scandal about the Post Office exploiting some flawed accounting software.

• It is a scandal about the development of flawed hardware and software systems, a flawed governmental and corporate procurement process and a flawed adoption and rolling out process.
• It is a scandal about how the Post Office, a state owned body with unlimited resources and its own prosecution service, operated with no effective corporate governance or Ministerial control or supervision and exploited flawed software, flawed contracts and the civil and criminal legal systems to extort money it was not owed from subpostmasters.
• It is a scandal about how the legal system failed – and continues to fail – to understand technical evidence.
• It is a scandal about how the legal system has failed for far too long those accused and convicted of crimes which did not happen. As the government’s own Compensation Advisory Board has said: “the justice system itself is called into question in the current circumstances.”
• It is a scandal about a failure of Parliamentary and Ministerial governance.
• It is a scandal about how the state fails to put right its mistakes and compensate those harmed by those mistakes.

Ultimately, it is a story about the abuse of power.

There are so many aspects to it that it can be hard to get your head round all of it. But these articles are an attempt to summarise some of the key issues. A work-in-progress, obviously. But I hope helpful.

1. An overview

2. The Business Secretary’s role

3. Compensation

4. Revelations from the Williams Inquiry

5. Ministerial and corporate governance of the Post Offiice

6. The reliability of computer evidence and how the Law Commission got this wrong

7. What Parliament did and did not do