The UK, Corporate Governance, And The Hint Of A Closing Of Ranks

There have been strange goings-on at the UK's Institute of Directors, which I would describe as a networking and business lobbying group that also seeks to promote good corporate governance. Its fortunes have seen ebb and flow in recent years as individuals at the top have changed and tried to steer it towards real leadership and also, to boost flagging membership.

Whatever you may think of it - and I have been critical in this blog recently of some of its standards - its worst offence to date over many years might have just been making too much noise being dull. Simon Walker, its last director-general, changed that during his tenure with an outspoken stance which I repeatedly covered on Forbes.

Yesterday a story  of accusations of sexism, racism and bullying against its first female Chair Lady Barbara Judge (widely described as either the 'best-connected' or 'the most networked' woman in Britain) broke. Given that it revealed 41 allegations investigated by the IOD with the help of an independent employment lawyer at Hill Dickinson resulting in a 40 page confidential legal report, you would have thought there would be a pause in the pace of events.

Complaints like that are of course, meant to be investigated in just such an independent manner for best practice in corporate governance.

But the legal report was leaked to The Times newspaper as it was apparently sent to all the council members by email (vindicating my view that the IOD needs an urgent revamp of the way in which it communicates).

That leak also suggests that someone wanted to ensure - given the names involved- that there could be no possible going back, or delay.

The lawyer conducting the investigation, Caroline Prosser of Hill Dickinson, is reported to also have interviewed IOD Deputy Chair Sir Kenneth Olisa. Sir Ken is the first black Lord-Lieutenant of Greater London, and I covered that appointment on Forbes.

According to the BBC, Director General Stephen Martin made a recording of a conversation with Lady Judge "because he thought she might make racist remarks." Clearly he too, wanted irrefutable "proof" to take matters forward. However, she did not know she was being recorded and has called it an effort at 'entrapment.' At the start of her career in the United States she was a corporate lawyer. It was all looking messy, very messy - already.

Lady Judge was described by Simon Gompertz at the BBC as "one of the country's most senior business figures, with a CV crammed with honours and directorships."

Since the story broke yesterday, we have been told both that Lady Judge was "suspended" from her role by the IOD and also that she had herself already stepped down. It seems it depends which news outlet you read.

This story in the Financial Times had a lot of the detail early on. It also gave us Sir Ken's reaction: "In his note to the council, seen by the Financial Times, Sir Ken said the executive summary of the report was 'defamatory, riddled with errors of fact, false accusations and un-evidenced opinions'." (my emphasis)

The FT also said he called for Dame Joan (who commissioned the legal report after the allegations)  to step down immediately as senior independent council member.

And the FT story  casually threw in: "The battle over Lady Judge is even more remarkable for the fact that her term at the IoD is set to expire in May. She is not seeking re-election. " The FT pointed out too, that her position as Chair of the IOD is not remunerated.

Set against that, one wonders if the language of 'defamation' becomes even stronger. But that was yesterday.

Now, it seems, it's all over. Lady Judge has resigned and so has Sir Ken.

Please note the following quote is from the BBC story link above - and as written, i.e. in sequence from the digital version.

"Deputy chairman Sir Ken Olisa has also resigned, citing 'powerful forces' within the organisation.

A recording of controversial remarks made by Lady Judge, and heard by the BBC, indicates she supports diversity.

However, the IoD director general Stephen Martin called her resignation a 'victory for ordinary staff members'." (my emphasis)

Oh my.

Please note: I was involved in early discussions around the launch by the IOD of a new corporate governance index, which I also covered on  Forbes. I also interviewed Ken Olisa for the Financial Times back in 2011, and we kept in touch.

He always had a touch of the dramatic in him - remember ENRC, where he was a non-executive director? He came to fame for calling it 'More Soviet Than City'.

Who else was on that ENRC board ? Well, the late Sir Paul Judge, married to (Lady) Barbara Judge. I knew him too - I was on the Cambridge Alumni Advisory Board for three years alongside him.

As a journalist and a headhunter I have encountered Lady Judge many times over the years. One of the earliest and most memorable time was when I was working in executive search, we were looking for law backgrounds, she was up for a position and she called and demanded to know who else was on the longlist and then- the shortlist. When I would not tell her, I had to hold the telephone a very long way from my ear. But she kept it up. It made a very strong impression on me, but it did not reduce me to tears. Almost, though. She was very powerful. I just needed a job.

The point of writing this post is to ask: do we seriously not know when such alleged events happen, or do we just look the other way ? Or are we too just too fearful of the response. Because if we are, let's just forget about talking about whistleblowers and accountability and corporate governance and accept that in the UK there is a protected elite, and a double standard.

As a businessman and a philanthropist, Sir Ken Olisa has done a huge amount of good. But his position in prominence now to the Royal Family might now mean he has no appetite at all for having his judgement questioned. If so, that is a real shame. Because I thought the rationale of honours and titles in the British system was designed to elevate people and encourage them to continue to behave at the high standard that got them there in the first place.

If you are still here, there's a good end to this story. The IOD, commenting tonight:

“This is a victory for ordinary staff members, who had the courage to risk jeopardising their careers, to speak out and make complaints about the conduct and language of people in very senior positions.

This is a victory also for good governance. Our HR department took these complaints seriously and instigated a truly independent process through an external law firm, which fully and fairly considered the allegations before producing their conclusion in a final report that the majority of the allegations were true. (my emphasis)

Today marks the start of a new era for the IoD where we are free to focus on modernisation, where we are able to share our learnings from this difficult challenge with other companies across the country who find themselves in extraordinary circumstances. The new IoD will strive to be even more supportive and collaborative, reflecting the culture of its courageous staff members.” : Stephen Martin, Director General of the IOD.

Let's see how much coverage that gets tomorrow, shall we ? Because that's part of the nitty-gritty, in my view, of better corporate governance and better corporate culture. Perhaps we need more dull people - as Richard Lambert famously said bankers would have to become.