May 7 2023

Remember the De Lorean fiasco? To provide jobs in Northern Ireland, the then government paid the bouffant-haired car designer to set up his factory there. It collapsed a few years later amidst missing money and fraud. Arthur Andersen, the auditors, who admitted missing obvious fraud signs, were banned from government work and sued. It was only when Blair won that the ban on AA was lifted and a risible settlement agreed. (Doubtless entirely coincidentally, AA had provided free advice to Labour in opposition. A “scratch my back and I’ll scratch yours” approach to favours has never restricted itself to one party.)

Fast forward a quarter of a century. Fujitsu, whose Horizon accounting system used by the Post Office, was responsible for the largest miscarriage of justice in British history, has suffered no similar penalty. Indeed, no penalty at all. Far from it. It has been rewarded with more lucrative government contracts; it has not paid any compensation; no company official has been held responsible.

Why? Well, one answer is that AA’s failures harmed the government. Whereas Fujitsu and the Post Office only harmed some lowly sub-postmasters and mistresses. A cynical take. But an accurate one. The brutal reality is that being in public ownership or a public service does not automatically mean an organization behaves well. Worse, it often means that when it causes harm to others, its primary interest is to protect itself – even at the expense of those it has harmed. This is not new. See how the Aberfan families were treated in the decades after the loss of their children. Or the victims of the blood contamination scandal or many other NHS scandals or Windrush.

This story shows a state – and many of its key functions: the Post Office, owned by the state, the criminal justice system, run by the state, and the responsible Ministers and civil servants – to be malign, incompetent, indifferent to the damage caused, defensive and determined (behind all the paraphernalia of inquiries, reviews, assessments) to delay the allocation of responsibility, effective consequences for those responsible and proper, timely compensation for those harmed. It is no consolation – nor anything for the rest of us to be proud of – that some judges, some lawyers, a few persistent journalists and 1 MP – James Arbuthnot – have battled and are still battling to ensure justice.

There has been a book, a podcast, a heartbreaking Panorama documentary. The Times has written some scathing editorials. The inquiry grinds on, lawyers argue about different compensation schemes, the police investigation into possible perjury by Fujitsu personnel has been announced. But nothing seems to happen. Meanwhile yet more postmasters die – 59 so far. Is that the plan? To wait until everyone is dead, then quietly bury whatever report is produced while those responsible get away with it and carry on making money? Apparently so.

It is cruel. It adds a further injustice to the original one. It displays a contempt for the people who have suffered and are still suffering. It displays an indifference to the human consequences of people’s acts and omissions, something all too easy to forget amongst the mass of wrongdoing patiently unearthed by courts and inquiries. That cruelty consists in holding out the promise of compensation while making the process of getting it long, complicated and difficult. Meanwhile, those responsible, both for the injustice and the delays, suffer nothing, withhold evidence from the inquiry and/or, grotesquely, award themselves bonuses and lie about it. On its website the Post Office says it wants “to remain one of the most admired institutions in the public sector”. “Remain“? “Most admired“? Both delusional and arrogant.

Why has this scandal not been taken more seriously?

• The very diffuse nature of the tragedy over two decades. Lots of individual stories, all heartbreaking. But no one event or place to focus on. No image. No buried school or trapped fans in a football pen or burnt-out tower. No anniversary. So it is easy for it to fade away into a complicated background, something to do with accounting and IT and legal stuff. No-one is going to sing their heart out for that. No Royal is going to visit and lay flowers.
• Worse – this was not just the wrong people convicted of a crime. There was no crime.  It is hard to get your head round the fact that hundreds of people were investigated, tried and convicted for crimes that never happened. How can this possibly be?
• The people to whom this happened come from all backgrounds, all over the country, of all ages. It makes it worse but also means they have no obvious representative to speak for them, no-one to whom they – collectively – matter.
• No political party has taken up their cause. All the major parties had Ministers responsible for the Post Office who failed to ensure that it behaved competently and then, when the scandal erupted, failed to ensure that it was handled properly. So they hide behind their pathetic claims that they weren’t briefed or didn’t realise or delegated or assumed that others were doing their job and are shocked and appalled and oh dear … blah blah .. and very sorry etc.,. What is the point of these junior Ministers if all they can do is hand-wringing avoidance of responsibility?
• Far too many groups behaved badly. What makes this so hard to comprehend is the overwhelming scale. Look at all those responsible: Fujitsu, those who developed, oversaw and sold Horizon, Post Office management at all levels, internal investigators, in-house lawyers, external lawyers, IT staff, those knowing something was wrong but saying nothing, Ministers, civil servants advising them, prosecutors, the judges’ ruling that the computer evidence should be believed (one of the stupidest judicial rulings made). All these, through their actions and omissions, are responsible; many continue to be responsible for the delays in giving the victims adequate compensation while they are still alive. Easier to forget or not engage at all.

Among all these failings, two deserve very close scrutiny.

The lawyers

There were obvious problems with the Post Office being its own prosecutor, the confusion between the role of investigators and prosecutors, the failures of those investigators, a lack of clarity about the duties owed and to whom by the in-house lawyers, failures to make proper disclosure, withholding key evidence, failure to speak up, conflicts of interest for the lawyers advising on the compensation schemes, lack of honesty, failure to understand or challenge the accounting and technical evidence (a persistent problem for the legal system – see the Sally Clark case) and so on. Bluntly, the Post Office ruined innocent people by lying, manipulating and subverting for its own commercial advantage the English justice system. Its lawyers were central to that. Many of those involved should be ashamed of – and deserve censure for – their unprofessionalism and behaviour.

The approach to the technical (in this case, computer) evidence

There is a tendency (not confined to the Post Office) to believe there is one technological system which will provide the answer to a problem; and believe only what that technology tells you. Both are foolish, dangerous impulses. (A lesson for us on the cusp of a new technological revolution.) When combined with working back from your desired conclusion (“we’re going to find fraud with our shiny new toy”), miscarriages of justice are all but inevitable. (Something for Holyrood to consider before proceeding with its judge-only rape trial pilot designed to increase convictions.)

What now?

3 people: the PM, the Chancellor, the Business Secretary need to stop hiding behind endless inquiries and legal to-ing and fro-ing and make it a top priority to get compensation paid promptly.

• Those MPs trying to help their constituents need to badger them until they do.
• The inquiry into responsibility must be uncoupled from the assessment and payment of compensation.
• Fujitsu should be given no government contracts until they pay compensation.
• The Post Office’s senior management needs replacing by honest capable people. A public explanation is needed for why it awarded itself a bonus scheme for complying with an inquiry set up to investigate its own failings and why it lied about it in its public accounts.

Meanwhile, remember the words of Desmond Ackner QC, Counsel for the Aberfan families, to the official inquiry. They apply as easily to Horizon as to a slag heap.

This was a slow growing man-made menace, fed by the indifference of those who should never have permitted its existence. That is the horror of this disaster. There can be no more bitter reminder of the truth and wisdom of George Bernard Shaw’s condemnation –

“The worst sin towards our fellows is not to hate them. It is to be indifferent to them. For that is the essence of inhumanity.”

Photo by Kutan Ural on unsplash.com.

May 30 2021

Who said this, about what and when?

“All organizations have bad apples but what an organization ….. also has is well paid and exquisitely educated bosses, part of whose job is to spot these bad apples and, if they are spotted, deal with them.”

It could have been said about any number of organizations over the years.

In fact, it was said last week about the BBC. It was said by Andy Webb, the journalist who uncovered the facts about how Martin Bashir got that interview with Diana and the – even worse – scandal of how this was covered up over the years by the BBC.

There is much that is familiar in this story:

• wrongdoing – in particular, immensely profitable (both financially and reputationally) wrongdoing;
• a “star” who can seemingly do no wrong and is protected by his bosses;
• whistleblowers who are ignored or punished;
• a wholly inadequate initial investigation;
• an eventual critical external report, continuing reputational and other damage and one hell of a mess to clean up.

As always, it is the response to and cover-up of the initial wrongdoing which causes most problems.

But it was what Andy Webb said next which goes to the heart of the issue of all wrongdoing and the culture change necessary to minimise it and its consequences –

“It would have been a huge ask of the Head of a News Division, having recently seen the most famous, the most significant piece of news coverage in the Corporation’s history, having gone round the world, having won prizes and plaudits, how much moral courage do you need to pull the plug on the story …. by saying that it was gained through an egregious ethical breach? Who would have been brave enough to do that? It’s my feeling the bosses were not brave enough to do that and it prompted the cover up.”

This is the acid test. A two-part test, really.

• When a high earner, a star, a prize winner misbehaves, will the bosses have the moral courage to pull the plug?
• And are those lower down the pecking order confident that this is what the bosses will always do?

Moral courage is at the heart of professionalism, at the heart of any successful, worthwhile, sustainable culture. It is its absence which so often allows small problems to become big ones. Building, reinforcing and rewarding the courage necessary to take difficult steps, to be open about what you are doing and why are at the heart of any successful culture change programme.

This time the BBC has been found wanting. But how many other organisations can honestly answer yes to both questions?

Photo by Varvara Grabova on Unsplash

March 30 2021

Perhaps there was a clue in the name: Archegos. Arch. Egos. As a description of many in finance it can scarcely be bettered. A novelist might even think it a tad too unbelievable, unless you were seeking to write satire.

But why bother when reality serves it up on a plate.

The founder of Archegos Capital Management, Bill Hwang described himself in 2008 as “like a little child looking for where can I invest to please our God.” Not long after – in November 2009 – Goldman Sachs’s Lloyd Blankfein described  bankers as “doing God’s work“. Oh dear. The full extent of what bankers had been doing had yet to reveal itself, whether to God or anyone else. Still, PR advisors would do well to note that such statements do not impress. Rather they tend to bring to mind the Ralph Waldo Emerson quote:

“The louder he talked of his honour, the faster we counted our spoons.”

Back to Mr Hwang. At the time of his humblebrag he was running Tiger Asia Management, which ended up being one of the largest investors in the expanding and profitable Asian market.

What God thought of Mr Hwang’s activities is unknown. What the SEC thought is, however. For in 2012 following a lengthy investigation, also involving the HK regulator, he pleaded guilty to insider trading and manipulation relating to trading in various Chinese stocks in late 2008 / early 2009. Surely not when he was trying to please God? Yes, apparently so.

A humongous fine inevitably followed. And almost as inevitably, the following year in 2013 Tiger Asia Management was wound up and Archegos rose, Phoenix-like in its place.

Now it is in trouble as a result of risky and very large investments having soured. Also in trouble are a number of banks which funded it, provided it with services and helped it trade. Questions no doubt are being asked – and, if not, they should be – about banks’ exposure to the firm, was this within risk limits, why so much leverage and so on. Other questions might also be asked: what due diligence was done? Was a fund run by a convicted insider dealer really a suitable client? How was it monitored? And so on.

Still, since bragging seems to be the fashion, might I modestly refer you to this article and my comments on what is often found when something goes wrong: “…so often, in virtually every case, there were bloody great red flags, or there was a clue that was missed.”

The name might have permitted a wry smile. Mr Hwang’s track record should not have done. Does no-one ever read this stuff?

Photo by Orkun Azap on Unsplash