Levitt report into RICS scandal reveals ‘disaster waiting to happen’
Criticisms within report into dismissal of NEDs - and way RICS handled accusations of financial mismanagement - have been accepted.
The report into the RICS scandal has been published following an external inquiry by Alison Levitt QC (pictured, below) which reveals the ‘unvarnished truth’ about how four respected Non-Exec Directors were forced out of the organisation two years ago after questioning its internal financial controls.
Her 167-page report reveals how a power struggle at RICS prompted by questions in December 2018 over an extended multi-million pound overdraft facility and inadequate cashflow management led to one of the organisation’s most embarrassing episodes.
The report also details step-by-step how the four NEDs on RICS management board – Amarjit Atkar, Bruce McAra, Simon Hardwick and Steve Williams – became increasingly frustrated by senior management attempts to obfuscate on the matter and arguments became increasingly personal, leading to their dismissal in November 2019.
Levitt says the fiasco was an accident waiting to happen, blaming RICS two-board system which its senior management often circumvented to ‘get things done’ but which meant power laid in the hands of a few senior directors; its Chief Executive and CEO.
She says this led to a ‘deep seated resistance to being challenged’ and that senior management figures were ‘quick to take offence’ when they were criticised or challenged, and that this why what started out as a difference of opinion ‘escalated into something bigger’.
Levitt is particularly critical of RICS’ initial internal report into the scandal, the conclusions of which had been pre-agreed including that ‘all was well’ and that senior management should not be criticised.
‘Right to challenge’
“The four NEDs were correct that the board should have had the right to inspect the [external BDO] audit report – and were right to challenge refusal to give them the right to do this,” she says.
Levitt also says that, during the period covered by her investigations, the organisations’ finances were ‘a mess’, that its legal advisors were ‘partisan’ and that the ‘leadership panicked and kept the governing council in the dark’.
In response to the report, RICS’ Governing Council member Nick Maclean (pictured) has promised that the organisation will now go through an extended period of consultation prior to reforms being brought in – including a commitment to improve how RICS members can feed back critically to its governing bodes more effectively.
Levitt told those gathered for the report’s presentation that unless reform is forthcoming and the organisation’s power structure is changed, the mistakes made during this scandal are in danger of being repeated.
RICS has also confirmed that boss Sean Tomkins is to leave the organisation.
Where to begin from Nick Maclean’s comment that RICS moving forward was going to be the gold standard of governance, that outsourcing the whistleblowing functionality of the listed company would solve things, to the fact that Sean Tomkins is just going to walk with all the CEO benefits attribted to someone who resigns their position, despite being identified as the person who was ruling RICS like his personal fiefdom, sitting on a huge problem until a solution turned up out of the ether, at which time the ‘uninformed’ body of RICS would be told all. My advice get the ‘four fired NED’s’ in harness asap, and build a grass roots team around them. Looking at the comments posted as the press release unravelled, the rank and file are not likely to just sit back and accept this Etonmess of a situation. And why did it take two yaers for the truth to come out?
Bent as a hairpin.