Handing back a CBE costs nothing, financially speaking. So it is little wonder that Paula Vennells, former chief executive of the Post Office, has discovered that returning her absurd award has prompted another question. Yes, but what about your bonuses?
The demand is obviously fair. And, critically, it is fair even according to the rules of the bonus scheme that operated during her seven years at the top from 2012 and 2019. Both the short-term incentive plan (STIP) and long-term (LTIP) at the Post Office clearly stated that there could be situations in which bonuses could be cancelled and individuals told to return cash.
This wording is from the Post Office’s 2012-13 accounts (page 52) and near-identical versions can be found in every subsequent year of Vennells’s tenure: “Executive directors have clawback clauses in their contracts, as well as the STIP and LTIP rules, which provide for the return of any overpayments in the event of misstatement of the accounts, error or gross misconduct on the part of an executive. These provisions are in line with market best practice.”
Any debate about a watertight definition of “gross misconduct” shouldn’t detain the lawyers too long on this occasion. Despite a report in 2012 from external reviewers that the Horizon IT system was “not fit for purpose”, the Post Office continued prosecutions until 2015 and then spent millions of pounds defending itself until the damning high court judgment in 2019.
Vennells’s incentive payments add up to £2.2m over the course of her time in charge. She may note that when James Crosby, former boss of HBOS, gave up his knighthood in 2013 after a parliamentary committee found he “sowed the seeds” of destruction at the bank, he volunteered to surrender 30% of his pension entitlement. Those were the days before clawback clauses but Crosby was nodding to the principle that giving up a gong is not enough. In a post-clawback world, matters should be simpler: the rules are meant to insist on repayment of bonuses. If the relevant clauses aren’t triggered in Vennells’s case, when would they be?
None of which is to deny that the rotten saga goes further than her. The politicians with oversight roles of the state-owned Post Office clearly have questions to answer, as do the relevant executives at Fujitsu, supplier of the dodgy IT software. But, among the business crew at the top of the Post Office over the years, the two chairs during Vennells’s time must explain why they backed the executives to the hilt.
Part of the job of a chair is meant to be about challenging groupthink and confirmation bias and spotting when an organisation may have got something spectacularly wrong.
The individuals in this case were Alice Perkins (2011-15) and Tim Parker (2015-22).
But the inquiry also needs to go further back to the pre-Vennells period when the prosecutions started. “I did not have any involvement in the Horizon issue during my time at Royal Mail,” said BT Group chair Adam Crozier, who was chief executive from 2003 to 2010 of the pre-demerged entity that managed Royal Mail and the Post Office, this week.
That statement reads like a variation on “don’t blame me, I was only the boss”. But, if it’s really the case that the Post Office was left to do its own thing within the wider Royal Mail organisation, then the question is who was supposed to be accountable for the biggest IT project in Europe at the time? Was Allan Leighton, chair of Royal Mail during Crozier’s time, supposed to have an eye on both operations? Or should the inquiry first be hearing from the likes of Alan Cook, later chair of insurer LV= but managing director of the Post Office from 2006 to 2010? If in doubt, summon the lot. It is important that some fuller version of boardroom accountability is established.
But retrieving Vennells’s bonuses ought to be straightforward. If he’s doing his job, Henry Staunton, today’s chair of the Post Office, should be on the case already.
