Robert Swannell – Culture, Curiosity and Risk

Robert Swannell making a point

Robert Swannell is a former accountant and barrister with more than thirty years experience as an investment banker and director of large companies (including six years as chair of Marks and Spencer). He is therefore a big deal. Big deals rarely feel they get things wrong.

Swannell had two articles of faith – the first was that he massively improved the Shareholder Executive/UK Government Investments risk reporting whilst he was at the organisation (ShEx became UKGI) and the second was that ShEx/UKGI’s failure to spot the Post Office scandal until March 2019 was because up until that point the Post Office had concealed the truth from their government paymasters.

Sam Stevens put the questions to Swannell on behalf of the Inquiry. I think it was his best performance to date. Stevens worked carefully, waiting until Swannell’s guard was down before gently skewering the narrative Swannell had prepared for the “benefit” of the Inquiry.

Stevens started by taking Swannell to the Shareholder Executive terms of reference and a bullet point which noted that ShEx was required to monitor its assets ie government-owned companies like the Post Office and “assess individual high-priority or high-risk transactions, projects or other situations where ShEx is actively involved.”

Was this, Stevens asked “to ensure that the asset was being appropriately overseen by the executive of ShEx?”

Swannell agreed. He told Stevens it was “where the risk register showed that there were particular high risks, either in impact or probability, or mainly both, that the board of ShEx… UKGI… had a good handle on what was going on within the organisation.”

Stevens asked if these “deep dives” – a phrase Swanell had used several times in his witness statement – were to “ensure… the executive of the Shareholder Executive – were appropriately overseeing the asset?”

Swannell replied with an illustration:

“The point at which I became aware that everything we’d been told about Horizon was incorrect… was in March 2019… and at that point you will see that the cadence of deep dives into the Post Office is extraordinary, and it goes from, as it was, not being on high on the risk register to being the focal point of the board’s attention.”

This was, said Swannell, the ShEx board “doing precisely what it should be doing”.

To a point, Lord Copper. What was ShEx doing on Swannell’s watch before 2019? Why did the organisation tasked with measuring and managing the Post Office’s business risk require an existential court battle and damning High Court judgment to finally smell the coffee?

Stevens took Swannell to the ShEx handbook, produced in 2007. He noted the Post Office’s responsibility to “seek an honest, open and ongoing dialogue with the government as shareholder” and that it “should operate a no-surprises policy, ensuring that the government as shareholder is informed well in advance of anything potentially contentious in the public arena.”

Stevens wondered if ShEx should have taken steps to ensure the Post Office was complying with this obligation.
“I believe that that’s exactly what they were doing” said Swannell.
Did Swannell know the Post Office was carrying out post-conviction disclosure work? As Stevens put it, deciding “whether or not documents should be disclosed to Subpostmasters who had been convicted of criminal offences.”
Swannell told Stevens he did not find this out until he was preparing for the Inquiry.

Risk, innit

Sam Stevens

Swannell was proud of his record on risk. He told Stevens:

“I placed risk as being one of the first items to be discussed at every UKGI board, so that the board meeting would start with the chief executive’s report, there would be a people report… and then there was risk… every risk that over the previous month had changed in character would be highlighted for the board and then the whole of the risk register, the composite risk register, would be set out for the UKGI board.”

“I did that because I saw that as the best way (in an organisation looking after a whole portfolio of interests) that you can best direct the board’s time to the things that have been flagged, hopefully appropriately, as the highest risk aspect.”

Stevens asked if by the time he assumed the role of Chair of ShEx/UKGI in November 2014, Swannell was aware of the Second Sight investigation?
“Absolutely not”, replied Swannell.
“Were you aware about the Post Office and government announcements in relation to the mediation scheme?” asked Stevens.
“I wasn’t.”
“Were you aware that the CCRC had been corresponding with Post Office regarding past convictions?” tried Stevens.
“I wasn’t”, repeated Swannell.

Swannell agreed that if everyone had been doing their job properly he should have been made aware of all of the above (as well as the Post Office’s post-conviction disclosure work). So what went wrong?

Curiosity and Culture

It’s here Swannell’s unifying theory kicked in:

“It’s clear to me, it was clear to us then, and by then I mean in 2019, that the culture at the post office was shocking, and by that I mean it was a closed, defensive culture that was not in the business of giving information. I can’t tell you whether information was withheld deliberately or whether they simply didn’t give it but whatever the reason there was there were a whole range of things that should have been known to the board of the Post Office, and then therefore to the direct UKGI board member and as a result of that to the UKGI board.”

Swannell intimated that had this culture been different, the problems would have reached the Post Office Board and UKGI well before March 2019. He then added his second element to the mix, positing the idea that when “an incomplete curiosity, if I can put it that way, meets a toxic culture, bad things happen”.

Stevens wondered if this “incomplete curiosity” was limited to the Post Office.
“Well, it’s of the Post Office,” Swannell replied “but we have to acknowledge that ShEx had a member on the Post Office board.”

Two of those three ShEx/UKGI Post Office board members will be giving evidence over the course of this week.

Having allowed Swannell to throw his colleagues under the bus, Stevens turned to Swannell’s great achievements on getting risks fronted and centred at ShEx/UKGI board meetings. He turned to a September 2014 heat map – something favoured by the organisation in the middle of the last decade. Stevens told the Inquiry that the Post Office’s risk profile was marked as Red/Amber, and, reading from the notes, said:

“if not managed successfully, collectively the risks have potential to significantly impact the commercial strategy and financial sustainability of Post Office Limited, jeopardising the long-term policy objectives of transformed network, reducing HMG funding and mutualisation.”

Stevens noted the blurb “doesn’t expressly identify what the risks are, does it?”
“No”, replied Swannell.
Stevens went on: “Under reputational risks it says ‘there is a significant political interest in the Post Office network… the ShEx/Post Office team are aware of the pressures and are working collaboratively with Post Office Ltd to manage risks away’. Again this doesn’t identify any risk expressly does it?”
“No it doesn’t”, admitted Swannell.
“And it doesn’t say how the Post Office team are mitigating the risks?”
“It doesn’t”, agreed Swannell.
“This risk register raises more questions than it actually answers” concluded Stevens.
Swannell did not disagree, but pointed out this board paper was before his time as Chair. After he became Chair, he told Stevens, “there’s no question that we improved the governance” so that “it would have been almost impossible to have such… an imprecisely described risk in the new regime.”

Stevens took him to a UKGI board risk register from November 2018, whilst the first trial of Bates v Post Office was actually underway. In this document the Post Office’s reputational risk is reduced from red to amber and here the blurb states this was due to “improved performance, making Post Office Ltd profitable and therefore increasingly self-sufficient financially.”

“Again, this document wasn’t highlighting expressly what the risks to Post Office were, was it?” asked Stevens.
“Correct”, replied Swannell.
“Why did the board think that that type of information was sufficient to challenge the executive on whether it was identifying risks appropriately?” asked Stevens.
Swannell tried to see if there was any further information available in the document. There wasn’t. He replied:
“I can’t answer that. I can’t recall why that would have been sufficient or was at the time, or what was said at the meeting. I think it’s a perfectly fair question.”

Miscarriages of justice, dude

Stevens took Swannell to a briefing note Swannell received before a meeting with Tim Parker, the Post Office chair, in July 2016. Stevens read out a section which noted “Tim may mention legal action being brought against Post Office in respect of its IT system Horizon and the claims that it wrongfully prosecuted/sacked a small number of agents.”

“Being aware of this allegation”, Stevens said “can you explain why you didn’t take steps to see that this allegation of wrongful prosecution… wasn’t included on the risk register?”
“I can’t explain, no,” replied Swannell “I think I would say that this is a three-page note and this is the last item on it, and that puts it in some context.”
“Well it says it’s an allegation of wrongful prosecution, that’s a serious matter isn’t it?” countered Stevens.
“It is, if I understood what wrongful prosecution meant”, attempted Swannell, the former barrister.
“Would you accept, based on being on notice of there being claims of wrongful prosecution, that you should have done more to see that this allegation was put on the risk register?”
Eventually, Swannell conceded. “Obviously with the benefit of hindsight… I would wish that I had. I didn’t.”

For a real-time gallop through the day and its documents (Swannell answered questions from around 2.30pm onwards), do have a look at the live tweets.
For a report on Tuesday morning’s ShEx/UKGI witness, Mark Russell, click here.


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18 responses to “Robert Swannell – Culture, Curiosity and Risk”

  1. These mandarins of the business world are now seemingly quizzed about their effort against remuneration, none of them are satisfied with one chair position, they all have multiple roles with varying business giving their vast and valuable expertise as they run through the revolving doors back to leafy and relaxed habitats where they count their money and laugh at their employers. A bunch of arrogant self serving dicks in expensive suits have never been held to account in such a public forum and long may it continue

  2. I wonder if anyone believes that the real, root cause of these Post Office Limited debacles has been identified. It seems, so far, the public and tax payers are expected to believe that ‘unfortunately’ multiple layers of corporate governance controls all failed both repeatedly and simultaneously. ‘With the benefit of hindsight I wish I had fulfilled my highly remunerated role but I didn’t – but I wasn’t the only one !’ ‘Why would I know what was going on in public relating to POL ?’ Why would I have realised that suddenly, after the introduction of Horizon, that hundreds of previously honest Sub-Postmasters had each decided to defraud POL ?’ PLEASE ! REALLY ?!

    I only have a small amount of intelligence, please do not insult the little I have.

  3. I agree about Stevens. He along with Messrs Blake, Price and Hodge are doing a damn good job – all in their own way. An inquiry of this complexity that takes years must require a lot of mental and physical stamina as well as a mastery of the brief, focus and attention to detail. They work well as a team. In this session it was obvious that Swannell, as with Grabiner, is more than aware that he is a big beast…and a big beast not accustomed to be called to account. His bearing is self-consciously ‘imperious’ and he looked a bit disappointed not to be questioned, unlike Grabiner, by star KC Jason Beer.

  4. Makes you wonder how Michael Marks opened his penny bazaar on Leeds Kirkgate Market in 1884 without a heat map. ‘Don’t ask the price it’s a penny’ worked well enough over the decades to allow our former barrister to eventually take over as Chair of a British institution – your M&S.

    By which time management styles had changed. We had heat maps, traffic lights, risk registers and management speak. From a penny bazaar stall to a penny arcade machine, or Excel as Microsoft prefer to call it. You can make all the coloured lights cascade.

    Helps when you are playing with the hard earned cash of taxpayers and gambling it on advice from so called legal experts.

    Here’s my advice.

    It’s risky, risky, very very risky, it’s very risky.

  5. while they didn’t get as far as MOVING any of the deckchairs, they deserve credit for their spiffy heat map of the titanic

  6. Risk it seems was based on a purely commercial level, once again nobody seems to have considered the private prosecution model to be a risk, even on a general level. As for Horizon on which the whole organisation was based, this once again seemed to be of little interest. There is a pattern here it’s noticeable that both at PO and Shex there is a real deficit of IT and Criminal law knowledge.

  7. Thanks Nick, willl try read your outstanding tweets with brilliant reporting on this ongoing scandal, only got two thirds down first one which was so full of detailed accounting of relationships with PO, SHEx, gov etc with hayfever fogging brain so will wait for relief to arrive before trying again…..don’t know how you are managing all this detail but so pleased you do.
    Not sure why am following this (she said before sneezing and eye wiping yet again) except it does explain why this whole country has degenerated for many decades now, into a poorly governed arena with regulations failing at every new apt of an exec/chair/minister who pretends to be infallible until found out to be another vain, self serving pompous……………………..errrrrr yes well…………

  8. You have to laugh if it wasn’t so serious. A barrister who hasn’t a clue what wrongful prosecution means. Then he sits on a board where he expects everyone to tell him what he should have discovered himself if he had actually carried out his duties in a competent manner. When they don’t point out something he should have known he denies any responsibility. The attitude of a coward & his incompentency will cost the tax payers a fortune & he will swan off still believing he did not contribute to the fiasco. So arrogant in his ignorance.

    1. “A barrister who hasn’t a clue what wrongful prosecution means.”
      But we had the Scottish Procurator Fiscal who failed to understand there was no evidence of actual cash shortfalls, and of where the cash went when SPMs were prosecuted… So such ignorance is not unique to him…

  9. Alistair Stobie avatar
    Alistair Stobie

    I hate risk maps, particularly when risks e.g. reputational are aggregated and then mitigated into meaningless blurb. This highlights how a part of the organisation can down play a risk by stating that its economic impact would be low or because they were nice people their reputation would be fine.

    By the time an aggregated risk map makes it to ShEx (sp?) discerning what the actual risk was is quite difficult. In particular because the focus on what I assume is in the top right hand corner is – we aren’t making money and are going to make less over time.

  10. ‘….if I understood what wrongful prosecution meant” – good grief, a barrister unsure what wrongful prosecution meant!
    Perhaps he and his colleagues at ShEx/UKGI ought to have been more curious…….,

    1. yes the Manuel (basil falwty ) answer to all questions ” I know nuffing”

  11. It is totally amazing that Swannell didn’t know anything about the PO Scandal until the first GLO judgement came out in 2019. No wonder the PO ran amok if he and his cronies were the ones providing ‘oversight’. These people are a disgrace. They sit on various Boards and other institutions, living off their previous employment, usually at an investment bank or large accountancy firm, and fail to provide anything at all to assist the company they are supposed to be responsible for. Swannell said there was a lack of curiosity at the PO but he didn’t display any when looking at the ‘risk register’. He was ‘right on it’ though when he read Justice Fraser’s judgement – about 10 years too late!

    1. I don’t understand how any analysis of risk wouldn’t include the fact that SPMs were contractually responsible for security and cash holding risk, and that the business strategy of the post office – ‘network transformation’ – was to make them more and more responsible for business risk.

  12. Great analysis, as usual, Nick – thank you.
    I was absolutely astonished to hear Robert Swannell, a former barrister, claim he didn’t understand understand what wrongful prosecution meant! I suspect the majority of ordinary people in the street could come up with a reasonably accurate guess as to what “wrongful prosecution” means and I wish Sam Stevens had challenged Swannell on this assertion, if only to prick his bubble of arrogant self-belief.

    1. I think there’s a legal meaning for “malicious prosecution” but that “wrongful prosecution” is a more laymans-like term.. The inquiry seems to use “wrongful prosecution” in their questioning; is that deliberate? Maybe there’s a reason but “malicious prosecution” sounds more apt to me.

    2. This relates well to a question I posed earlier –

      Are there legal implications to the disclosure by Mr Jenkins that some witness statement documents were presented in court without his signature on them? This begs the question that has been asked earlier by other commentators – why did this slip through the legal process? Is this an indication of rather sloppy processes at some of the trials?

      This statement by a barrister and other errors/mistakes/lack of follow up, etc by the legal teams – seems to point out major flaws in the legal system which need to be made more tight to ensure other legal unjustices do not re-occur.

    3. Yes, so now have a barrister claiming he doesn’t understand what wrongful prosecution is, and someone with the intellect to gain a Cambridge maths degree claiming he doesn’t know the difference between civil and criminal proceedings. They think they can take us for fools, don’t they?

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