| THE CONTROLS WHICH SHOULD HAVE ENSURED PROBITY
|
| |
| (i) The selection of Mr Green
|
| |
Q 11, 12
Q 61
Q 12
Q 67
Q 23, 24
| 11. Our predecessors asked how Mr Green had been selected for the Chief Executive post. The Department said that they had had a properly competitive selection procedure run for them by recruitment consultants Norman Broadbent International. The Department stated that Mr Green had been a client of the recruitment consultants. However, he had made an application in response to the advertisement before the consultants had put the post to him as a client. They had had 266 replies to the advertisement and twelve people had been interviewed in depth by the consultants. The Department then had a selection board which decided, unanimously, that Mr Green was the preferred choice. The Department said that the consultants had taken up Mr Green's references and there had been no problems in them.
|
| |
| Q 63, 101
| 12. Our predecessors asked how much had been paid to the recruitment consultant. The Department said that the fee was £18,805. Subsequently they cor- rected that evidence by means of a manuscript annotation to another document, stating that the cost had been £61,084 including advertising expenses and a fee of £33,000.
|
| |
| Q 46
| 13. The Department stressed to our predecessors the importance, when appointing chief executives as Accounting Officers, of the Departmental Accounting Officer or one of his senior staff, trying personally to be part of the selection board, along with the Chairman and other Commissioners from English Heritage. The Departmental Accounting Officer had gone through the whole interview process in the case of Mr Green.
|
| |
HC 199; Q 5
Q 68, 69
| 14. In evidence our predecessors had taken in January 1996 with regard to the National Heritage Memorial Fund, the Departmental Accounting Officer had said that he had a particular task which was to give his own judgement as to the fitness from experience and knowledge of the candidates to take on that aspect of the job which involves Accounting Officer responsibilities. Our predecessors put it to the Department that they had got that judgement wrong, given Mr Green's performance. They accepted that in the case of Mr Green the judgement had clearly not been correct. They said that it had been rather difficult to foresee a situation in which someone would go against the clearly expressed policy of his own board.
|
| |
| (ii) Guidance and Training for new Accounting Officers
|
| |
| C&AG's Report para 8
| 15. Mr Green's appointment letter as Accounting Officer emphasised his responsibility for advising the Commissioners of English Heritage on value for money and financial propriety and regularity, and was accompanied by a copy of the Treasury Non-Departmental Public Body Accounting Officer memorandum. In addition, the Departmental Accounting Officer met Mr Green to discuss the nature of the English Heritage job. It was also the Department's practice to suggest that new Accounting Officers attend the Civil Service College course for new Accounting Officers. Mr Green was involved in negotiations for the new Financial Memorandum for English Heritage (agreed with the Department in July 1995) which included requirements of financial propriety and regularity. Mr Green was briefed on these negotiations and the Treasury memorandum by his then Director of Finance.
|
| |
| C&AG's Report para 9
| 16. Mr Green attended the New Accounting Officer course on 22 May 1996, over 14 months after his appointment. Despite the various communications mentioned in the paragraph above, Mr Green told the National Audit Office in September 1996 that it had not been until his attendance on this course that he had fully appreciated the more stringent interpretation of standards of public accountability expected in the non-departmental public body environment compared with the business world where he had previously been.
|
| |
Q 1
Q 1
| 17. Mr Green had been appointed as an Accounting Officer in March 1995 after our predecessors had produced a number of reports saying how unhappy they had been with certain examples of the way public business had been conducted. Yet he had stated that he had been unaware of matters which should have been basic to the work of an Accounting Officer. Our predecessors asked the Department why these matters had not been made crystal clear to him upon appointment. The Department stated that they had found it surprising that Mr Green had said that he had not been aware of public accountability responsibilities some 14 months after his appointment because, on his arrival and during his first months in post, he had received a lot of advice about what was proper, and right and sensible.
|
| |
23rd Report of the Committee (Session 1995-96) (HC 199)
Q 9
| 18. This was the second time our predecessors had considered the actions of an Accounting Officer of a non-departmental public body for whom the Department had responsibility. The former case had concerned the Accounting Officer of the National Heritage Memorial Fund, upon which the Committee reported in June 1996. Our predecessors put it to the Department that this suggested something seriously inadequate in their supervision. The Department recognised that this was the second time that they had appeared before the Committee concerning the performance as an Accounting Officer of the chief executive of one of the bodies sponsored by them. They stated that in the first case there had been a direct conflict of interest and that the Departmental Accounting Officer had had to take the unusual, indeed unique, step of removing that person's Accounting Officer responsibility. In the case of Mr Green, the Department said that they were dealing with a breakdown of the responsibility and duty of the chief executive to his Board, which had been properly dealt with by English Heritage and had not required Departmental Accounting Officer intervention.
|
| |
Q 125
Q 127
Q 8
| 19. The Department stated that they had 36 executive non-departmental bodies, some regulators, some advisory bodies and some public corporations, with around 48 Accounting Officers. Our predecessors therefore asked the Department about their powers to control their many non-departmental public bodies. The Department said that, in the main, their relations with most non- departmental public body Accounting Officers so far had proved successful and effective. The Department particularly welcomed, and had implemented, the suggestion in the Comptroller and Auditor General's report that, rather than simply giving advice to Accounting Officers when newly appointed that they might take a training course, the Department should insist that they go on the appropriate course.
|
| |
| Q 8
| 20. The Department also said that they had done a number of other things in the last couple of years, for example a comprehensive audit of fraud and of fraud systems in organisations. They stated that they believed that they could ensure that the systems on the whole were correct and that they constantly tried to improve them. They were then very dependent on individualities and personalities. The Departmental Accounting Officer told our predecessors that his own view was that the only way to ensure that the Department were able to carry out their supervision properly and could be satisfied that those in charge knew what their responsibilities were, was to see them regularly and talk to them regularly about these matters.
|
| |
| Q 49
| 21. As the Department had advised Mr Green to go on the New Accounting Officer course, we asked them whether they had kept an eye on whether he had gone on that course. The Department said that they had taken the view that if they had advised someone at that level of seniority they expected them to take the advice seriously and had not policed it in the way they would have done had it been a requirement. The Department had subsequently made it a requirement and policed it appropriately. Of the 13 Accounting Officers appointed by the Department between July 1995 and February 1997, the Department said that they had made sure that 10 had been on the course and the others were to go on it.
|
| |
| (iii) Standards of Corporate Governance
|
| |
| Q 7
| 22. This case at English Heritage raises issues of internal control and corporate governance at the highest levels within a publicly funded body. In general at chief executive level detailed supervision by a superior officer is not appropriate or practicable, and arrangements have to exist whereby senior staff and auditors can be relied upon, where necessary, to report to the appropriate authority. In the case of English Heritage, reporting as regards actions by the chief executive would be to the Chairman, the Commissioners and the Department. At English Heritage the Director of Finance, a very responsible job dealing with large sums of money, had seen things were clearly wrong but had not advised the Chairman. Our predecessors put it to the Department that he might have come to them to seek advice. The Department said that if he had come to them they would have advised him to report to the Chairman. They also said that their view was that the matter of the furniture should have been raised with the Chairman straight away.
|
| |
| C&AG's Report para 36, Evidence p 7
| 23. The Director of Finance had considered that to bring the draft Internal Audit review of senior management expenses to the immediate attention of the Chairman in December 1995 had been unnecessary. However, all investigations concerning the actions of chief executives carry with them a high degree of sensitivity. It is important that, where there are suspected or actual errors or irregularities, not only are they rigorously and promptly investigated but the conclusions are reported to an appropriate level above that at which the matter occurred.
|
| |
Q 7
Q 31
| 24. In relation to the purchase of Mr Green's furniture, the Department told our predecessors that the fundamental question had not been asked, which had not been whether the system had provided value for money but whether it had been right to make the transaction in the first place. English Heritage said that they had been able to find no evidence of any of the people consulted at the time having picked up that particular point. They had been diverted to the value for money issue.
|
| |
| Q 9
| 25. The National Audit Office does not audit English Heritage. Our predecessors put it to the Department that to have had someone on the ground from the National Audit Office to whom the Director of Finance could have turned for assistance might have helped to bring things to light at a much earlier stage. The Department said that although there had been some delay, the external auditors who had been appointed by the Department had drawn the conflict of interest in relation to the furniture to the attention of the Chairman.
|
| |
| Q 3, 4
| 26. Our predecessors asked about the new code of conduct which had been issued at English Heritage, whether this suggested lax control beforehand and what English Heritage had expected from this new code of conduct. English Heritage said that one of the lessons that had emerged from this whole episode had been that the staff who had been concerned with some of the problems with Mr Green had found that they had not known what to do. English Heritage said that with hindsight what should have happened was that the staff who had direct problems with Mr Green should have gone to the Chairman, but they had no guidance.
|
| |
C&AG's Report para 32, Evidence p 6
para 33
para 34
| 27. Mr Green emphasised to the National Audit Office his perception of the distinction between the role of the Chairman and the Commissioners, and the executive's role of implementing agreed policies and advising the Chairman and Commissioners on progress and problems. Mr Green recognised the Chairman's experience in marketing, but questioned whether the closeness of the Chairman's involvement impeded legitimate executive action in generating income and blurred the chief executive's responsibility as Accounting Officer for the overall performance of English Heritage. The Chairman told the National Audit Office that, as far as he was aware, any tensions between himself and Mr Green had arisen only after Price Waterhouse had been called in on 14 June 1996. The Chairman stressed to the National Audit Office that the effectiveness of his post was dependent on his being kept fully informed about the implementation of policies and important developments. There must be a relationship of trust between the Chief Executive on the one hand and the Chairman and Commissioners on the other. Mr Green's actions had been a negation of that trust.
|
| |
Q 142
Q 163
| 28. Our predecessors asked English Heritage about the relationship between Mr Green and the Chairman and whether there was some irritation between them. English Heritage said that it was fair to say that they were both very strong characters, that they had been fairly robust in their dialogue and that the Chairman was characteristically very frank. The Departmental Accounting Officer said that he saw both of these powerful characters regularly and that, if there had been problems between the two men, they had not been unmanageable problems. What was required in these circumstances was a sensible partnership and a clear understanding of whose sphere of influence is control as opposed to advice.
|
| |
| Conclusions |
| |
| 29. We note the seemingly rigorous arrangements leading up to the unanimous selection of Mr Green for the post of chief executive of English Heritage. We consider it important that Departmental Accounting Officers are involved closely in the selection of chief executives of non- departmental public bodies, as occurred in this case. We recognise and emphasise the importance of their judgement as to the fitness of candidates to take on that aspect of the job which involves Accounting Officer responsibilities. We note that in retrospect in the case of Mr Green the judgement was clearly incorrect.
|
| |
| 30. We are seriously concerned that the true extent of the fees paid for the recruitment of Mr Green was not told to our predecessors and was subsequently notified only as a manuscript annotation to another document. We consider that our predecessors might have asked further questions had they been properly informed of the cost of £61,084, including fees of £33,000. We consider that this was a large amount to pay for recruitment, especially when the candidate proved to be unsatisfactory in some respects and was already on the consultant's books.
|
| |
| 31. We note that Mr Green had been appointed as an Accounting Officer after our predecessors had produced a number of reports saying how unhappy they had been with certain examples of the way public business had been conducted, including a case in the Heritage sector.
|
| |
| 32. We note that the Departmental Accounting Officer had met Mr Green and had suggested that he should attend the Civil Service College course for new Accounting Officers, and that he had received other briefings and advice on what was proper, right and sensible. We are surprised that Mr Green had told the National Audit Office that it was not until he had attended the course, over 14 months after his appointment, that he fully appreciated the more stringent interpretation of standards of public accountability expected in the non-departmental public body environment. We do not find Mr Green's professed lack of awareness credible.
|
| |
| 33. We note and welcome the importance that the Department attach to regular contacts with Accounting Officers of sponsored bodies over which the Department have oversight. We stress the importance of the Civil Service College course for New Accounting Officers and look to the Department to ensure that new Accounting Officers of bodies overseen by them attend that course as soon as possible after taking up their post.
|
| |
| 34. We note with concern that this was the second occasion on which the attention of the previous Committee had been drawn to the unacceptable actions of an Accounting Officer of a non-departmental public body for which the Department has responsibility. Both matters involved a breakdown of the proper conduct of public business by the Accounting Officers of the organisations concerned. We recognise that the Department has since taken action to improve the situation. We nevertheless remain seriously concerned that, in Mr Green's case, the Department did nothing for more than 14 months to satisfy itself that he had, in fact, completed the Accounting Officers course. We therefore recommend that the Treasury draw the attention of Departmental Accounting Officers to their responsibility to ensure that the Accounting Officers of those organisations for which they have oversight do complete their induction process at the earliest opportunity.
|
| |
| 35. We consider that this case at English Heritage raises important issues relating to internal control and corporate governance at the most senior levels within a publicly funded body. We consider it unsatisfactory that the Director of Finance recognised that things were clearly wrong but did not inform the Chairman. We consider that the matter of the proposed sale of the furniture by Mr Green to English Heritage should have been raised by the Director of Finance with the Chairman straight away. We agree with the Department that the fundamental question about the purchase of Mr Green's furniture was not whether the system provided value for money but whether it was right to make the transaction in the first place. We note with concern that no one consulted at the time picked up that point.
|
| |
| 36. We note that the Chairman and Mr Green were both powerful characters and that, in the Department's view, if there had been any problems between the two men, they were not of unmanageable proportions. Nonetheless, we consider it likely that the relationship between the Chairman and Mr Green was a factor in the events at English Heritage. We conclude that circumstances involving such strong characters serve to emphasise the importance of there being reliable controls and corporate governance arrangements firmly in place at the most senior levels, including reporting to the Chairman, the Commissioners and the Department when appropriate.
|
