Thursday, 4 May 2017

The Innovation Fund: Failings of the Board

Sir Desmond: "So it all boils down to the Industry Co-partnership Committee. Still, I find that quite acceptable."
Sir Humphrey: "Well, it is within the gift of my Minister, and you would only put in appearances once or twice a month."
Sir Desmond: "Are there lots of papers?"
Sir Humphrey: "Yes, but it wouldn't be awfully necessary to read them."
Sir Desmond: "Then I wouldn't have anything to say at the monthly meetings."
Sir Humphrey: "Splendid, I can see you're just the chap I'm looking for."

Yes Minister, Jobs for the Boys

I’ve been reviewing the recent report, and the chief defence of all the Ministers involved is that they were given bad and incorrect advice by their officials, and the Innovation Board, which knew about matters, concealed the problems which had arisen.

There may actually be some substance to that. Looking at a scrutiny report in which links of responsibility were set out, Philip Ozouf said to Scrutiny:

“We are] saying: ‘We do not mind you taking some risks, Chief Officer, but obviously you are going to need to do this properly and have a good governance structure." So our job and Jim Shilliday’s job is to make sure that we have forged a good governance structure and we have questioned E.D. (Economic Development) and questioned and had a constructive tension between Economic Development and Treasury to ensure that we have got a governance structure that works, so that is why in the report we have got an independent chairman, we have got non-execs we have got a reporting line about who signs off and all the rest of it, so there is a whole gubbins of rules, but also what we have got to be careful of is that we do not smother.”

So much for the innovation board! As this report is just on Ministerial responsibility, their part is not questioned, but clearly was deficient.

Why is their bizarre censoring of the report? The name Ms. M. Drummond (Strategy Manager) is blanked out, but visible in the report it refers to. There is no point in taking out names if they are visible in the public record.

The key paragraphs in the report are as follows:

“From my consideration of Email correspondence and Board Minutes, as well as interviews with the relevant Ministers, there is nothing to suggest that up until at least 2016 and possibly later, Ministers were aware of the problems that the JIF Executive and Board were experiencing nor that there were any problems with the OTRs; on the contrary the evidence was that the Ministers believed that the fund was being run properly by both their officers and the Board.

Indeed, the C&AG herself was concerned that "reporting at Ministerial level was inaccurate or delayed: (i) during 2015 the quarterly reports from the JIF Executive state that there were no breaches of conditions of loans, despite significant non-compliance with the requirements for reporting by borrowers and the known failure of one company to have complied with a specific requirement of a loan immediately after drawdown; and (ii) ._ there was a six—month delay in officers formally briefing the Assistant Chief Minister on issues concerning one loan. This was despite a need for this briefing having been identified and minuted at three meetings of the Board’:

Further, the JIF Board Minutes of 1 July 2014 record that Chair was now meeting with Alan Maclean (Minister for Economic Development) on a monthly basis- However, in interview, Senator Maclean said that he was not aware of any failure to comply with the 0TRs, nor had he been informed of any change in risk profile of the Fund- Senator Farnham also stated that he was not aware that there had not been compliance with the OTRs-

Similarly, an E-mail from Senator Ozouf to ‘ (JIF Executive Officer) dated 23 January 2015 suggests that any concerns the Board had about the operation of the JIF were not, at least at that stage, passed on to Ministers- Senator Ozouf wrote: "I met with Tim last night and very, very pleased with what I heard. It was an excellent meeting which filled with me confidence. I'm very pleased with the Board, structure, processes in place and he clearly excellent support you are giving this massively important project.” 

It is clear from later E-mails that Senator Ozouf did not meet Tim Herbert again until at the earliest sometime after 20 October 2015. Indeed, Senator Ozouf in his follow-up written response to my questions noted that in reading through E-mails to respond to the review: "I have also learnt about a very significant amount of information that I was never told - despite asking."

It does look as if Philip Ozouf has some cause for complaint because of this – having selected “the great and the good”, it turned out that they were “the inept and the useless”. If there is one lesson which must be learnt it is that paid boards like this need careful monitoring to ensure they are doing their job right! An impressive CV does not indicate how useless they might turn out to be.

Is it any wonder that the Chairman – “due to other commitments”, as we were told in January 2016, stood down just as the Fund and its operations were suspended? The rest of the Board should also be dismissed forthwith, and composition of future "boards" given greater examination than has been the case in the past. 

If there is one lesson which must be learnt it is that paid boards like this need careful monitoring to ensure they are doing their job right! An impressive CV does not indicate how useless they might turn out to be. They should not be cosy jobs for the boys, as Yes Minister suggests.

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