Here is a short extract from Nick Gould’s paper about the Post Office Scandal and years of failure around corporate governance matters. He wishes it could be put in front of every director, because apparently far too many still don’t understand the real life relevance or implications of these failures.
“As a direct result of the Post Office Scandal, directors should recognise that issues directors’ duties/ corporate governance must now be taken much more seriously because ,when they aren’t, at an extreme many people get sick and some die. So far, it is believed, more than 200 deaths, including several suicides, are attributable to the Post Office Scandal over the decades. Some people died before their names were cleared of having been convicted wrongly. The deaths continue as does the Scandal itself.
Here are three thoughts, and trite as they may seem – they aren’t at all, as the Post Office Scandal ought to make clear:
1. Be curious and don’t be seduced by group think. The former chair of a Whitehall agency responsible for taxpayers’ interest in the Post Office has blamed the Horizon IT scandal on a mixture of “incomplete curiosity” and “a toxic culture” at the state-owned company. The veteran City businessman told the Post Office Inquiry that, in his view, what went wrong at the Post Office was partly down to a “closed, defensive culture” combined with incuriosity. “I’m afraid that when an incomplete curiosity … meets a toxic culture, bad things happen.”
2. Use common sense. It was a piece in late 2019 in the Sunday Times which started my interest in the Post Office Scandal. The article noted that had the then (now ex) CEO of POL used some common sense instead of relying quite so much on her legal advisers perhaps some outcomes of the Scandal may have been different.
3. Apply the “smell test”. This relates to an enquiry chaired by the Hon. Justice Owen more than 20 years ago into the corporate failure of a large Australian insurance group. He suggested that companies must develop a culture of compliance including structures, programmes and procedures, but they must also commit to developing an ethical framework for their activities. He says these have to pass "the smell test" - does the transaction or activity smell right? "Quite often the gut reaction to that will be the right one," he said. Too often companies take a "tick-the-box" approach to governance, but as he said, you have to stress the substance over the form. Or to precis the above he wrote: “Ask the question — forget about issues of right and wrong — but what in the hell were they thinking? Did they ever apply the olfactory test? Did they ever go back and ask themselves, ‘What would my grandmother have thought of this?’”
I understand this may not be classical/modern legal theory, but as I suggested in my submissions to the Post Office Inquiry , as well as in a recent paper produced by an Institute of Directors working group, during 25 years of the Post Office Scandal, the smell test was sadly missing as was any concept of common sense.”
For more information on Corporate Governance support and Training on Directors' Duties, please get in touch at contact@impactlawyers.co.uk
Nick Gould is a highly experienced and respected corporate lawyer.
Nick started his career at a Magic Circle firm and has since been a partner at various other law firms. Until recently, Nick spent 5 years assisting several sub postmaster clients and victims of the Post Office Scandal as one of the very few corporate lawyers involved.
From that experience, Nick has sparked a passionate and renewed interest in the laws around directors and their duties as well as corporate governance, particularly for smaller companies, including training on Director Duties.
Nick has worked with the Institute of Directors on various projects and supplied a detailed paper to the Post Office Enquiry on some of these topics. He has also written short and longer papers on topics ranging from directors' duties to helpful tips for start-ups; why keeping paper trails is crucial; and the value of a written contract. Most recently Nick has co-authored two short papers about business and ethics.
Nick is a modest lawyer who is committed to providing high quality legal work to those who need it.