Select Committee on Public Accounts Fourteenth Report



THE ALLEGATIONS OF IMPROPER PAYMENTS BY THE ROYAL MINT

19. In May 2002, the Deputy Master was alerted to allegations that over several years to April 1999 the Royal Mint had been involved in the making of improper payments. Having alerted Treasury Ministers, he conducted an internal investigation and submitted a report on his findings to the Financial Secretary to the Treasury on 25 June 2002. The Financial Secretary wrote to both the Chairman of this Committee and also the Comptroller and Auditor General on 1 July 2002, notifying them of her decision that the Deputy Master should notify the Serious Fraud Office of the allegations and provide it with a copy of his report.[28] The investigation by the Serious Fraud Office is continuing and we may decide to return to this issue after that investigation is completed and any subsequent legal actions concluded.

20. In July 2002, the Treasury agreed with the Deputy Master that, in the light of his findings and the circumstances of the banknote theft, an independent review of the Royal Mint's internal financial control systems should be commissioned.[29] Grant Thornton was appointed to conduct this review and submitted its report[30] to the Financial Secretary to the Treasury on 24 September 2002.

21. The Grant Thornton report contained 70 recommendations designed to secure improvements in the Royal Mint's overall corporate governance arrangements and in the operation of its internal financial controls, together with an Action Plan which incorporated the responses of the Royal Mint's Management to each point.[31] The Deputy Master intended to ensure that all of these recommendations would be addressed by 31 December 2002 at the latest.[32] In responding to a Parliamentary Question on 23 January 2003, the Financial Secretary to the Treasury said that action in respect of 67 of the 70 recommendations had been completed. Of the remainder, two would be complete by 31 March 2003 and one (relating to IT system access controls) had been found to be impractical.[33]

THE APPLICABILITY OF 'CROWN IMMUNITY' TO THE ROYAL MINT

22. On 28 June 2001, an accident at the Royal Mint resulted in the death of an employee. A 6.5 tonne bell annealing furnace became detached from the hook of an overhead crane whilst being transported between locations in the production department and fell four metres to the floor, striking the employee and causing fatal injuries. A subsequent investigation by the Health and Safety Executive (HSE), which received the full co­operation of the Royal Mint, determined that the furnace had not been properly attached and secured to the crane lifting hook. The HSE found that the Royal Mint had failed to perform a suitable and efficient assessment of the risks posed by the crane operation and that not all employees involved in the process could be shown from written records to have received sufficient training and instruction.[34]

23. The Royal Mint told us that it had undertaken a range of measures to address the specific findings of the HSE, which had since confirmed that it was content with the action taken.[35] The Deputy Master had also given particular attention to improving health and safety standards and staff awareness throughout the plant in the months since the accident.[36]

24. We sought to establish whether the fact that the Royal Mint enjoys the protection of Crown immunity had contributed to the weaknesses and failings in health and safety procedures uncovered by the HSE investigation. Crown immunity means that bodies such as the Royal Mint cannot by prosecuted for offences either created by statute or of the common law. In the case of health and safety legislation, whilst the law applies to the Royal Mint, the results of HSE investigations—as in this case—can only result in Crown censure. Whilst Crown immunity does not grant protection to individuals from prosecution, in this instance the HSE and Police investigations concluded that no Mint director or employee should face prosecution.

25. Crown immunity does not provide protection from civil claims. The Royal Mint has written to the representatives of the deceased employee to confirm its admission of liability and asked them to provide details of the quantum of their claim, which will be considered sympathetically by the Royal Mint.[37] The Deputy Master gave us an absolute assurance that the applicability of Crown immunity to the Royal Mint in no way impacted on the attitude of the organisation to the importance of compliance with health and safety legislation.[38]

26. In a note submitted to the Committee following our evidence session, HM Treasury officials stated that the Government's position on Crown immunity remains as set out by Lord Falconer in his response to a Parliamentary Question by Lord Kennet, given on 4 November 1999.[39] However, recent consultation papers on corporate killing and health and safety have proposed modifications of immunity. In the light of responses to that consultation, officials have analysed the options and advice is to be put to Ministers.[40] Although recommendations on policy lie outside the remit of this Committee, we were told by the Deputy Master that he personally would have no problem if a policy decision were to be taken by the Government to remove Crown immunity from the Royal Mint.[41]


28   C&AG's Report, paras 40-45 Back

29   ibid, para 46 Back

30   Report by Grant Thornton, Financial Systems Review of the Royal Mint Back

31   C&AG's Report, paras 49-53 Back

32   ibid, para 55 Back

33   HC Deb, 23 January 2003, col 432W Back

34   Q 78; Ev 23-24 Back

35   Ev 24, para 16 Back

36   Qq 3-4 Back

37   Qq 7, 177; Ev 22, Appendix 2, para 3; Ev 25, Appendix 3, para 18 Back

38   Q 4 Back

39   HC Deb, 4 November 1999, col 98W Back

40   Ev 22-23, Appendix 2, paras 4-5 Back

41   Qq 108-109 Back


 
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