The common thread at the heart of the Post Office-Fujitsu scandal is a lack of accountability.
Business panjandrums, such as former managing director Alan Cook (one of the men who tried to sell LV to private equity) and Paula Vennells, were able to avoid responsibility for a terrible scandal which cost lives because no one was watching.
It took media investigations and a powerful ITV mini-series to persuade Vennells to hand back her CBE.
She is following in the steps of James Crosby, who surrendered his knighthood after the implosion at Halifax Bank of Scotland (HBOS) in 2008.
State ownership, still much admired by many on the Labour benches, is meant to operate in the best interest of the workforce, the consumer and the taxpayer.
Rudderless: No one at the Post Office was prepared to hold anyone but the unfortunate sub-postmasters and post-mistresses responsible for foul-ups at the top
At the Post Office it worked against the greater public interest because no one was prepared to hold anyone but the unfortunate sub-postmasters and post-mistresses responsible for foul-ups at the top.
Complacent LibDem ministers Ed Davey and Vince Cable, knights both, were too busy being important to listen to obvious complaints about miscarriages of justice. The sister organisation Royal Mail hardly has been the roaring success hoped for as a listed company.
But accountability to investors means that successive bosses who blundered – Rico Back and Simon Thompson – were unceremoniously dumped from office.
Alison Rose at NatWest and Bernard Looney at BP learned late last year that shareholders are ruthlessly unforgiving of blunders and boards will take harsh decisions rather than reward errors.
It is not just the Post Office which proved rudderless in crisis. Fujitsu, the builders and operators of the Horizon IT system, have proved equally clueless when it comes to doing the right thing.
Fujitsu has long enjoyed favoured status when it comes to government contracts. The firm has deep UK roots. It was pieced together through a series of mergers in the 1960s to create International Computers Limited (ICL), then the biggest digital group outside the US.
In 1990 some 80 per cent of the company was sold to Fujitsu making the Japanese firm one of the largest overseas investors in the UK.
Japanese companies, with their eye on the long-term, generally have been good owners of British assets.
But with the loss of UK ownership and a stock market quote, there was a significant diminution of command and control.
Tokyo companies are not known for transparency. Scandals at Olympus in 2012 and Nissan in 2018 exposed a tendency to prevaricate and cover-up when faced with wrongdoing. Fujitsu in the UK found it much easier to obscure rather than come clean about errors.
The combination of second rate management and a lack of accountability at both the Post Office and Fujitsu proved to be the perfect storm for the sub-postmasters and mistresses. There were no powerful outside forces policing behaviour.
Free market capitalism and British-owned firms often make terrible mistakes. Think of the people and businesses harmed as a result of fraud at the Lloyds/HBOS operation in Reading. But the prospects for accountability, justice and compensation are much higher.
Gilts take-off
Dire warnings in the FT of a ‘debt deluge’ and BlackRock’s prediction of a ‘UK Bond Sell-off’ don’t appear to be putting off investors in British government stock.
To the contrary, bond buyers have looked at the prospects for the UK economy – which ended 2023 on an upbeat note – and decided to pile in.
Somebody perhaps noticed that in spite of efforts to talk Britain down, the UK’s ratio of debt to output is healthier than most of the G7 bar Germany.
At the latest auction of gilts, enthusiasts bid 3.62 times for £2.25billion of the 2043 stock with a coupon of 4.75 per cent.
That’s the greatest demand since the start of Covid-19. That should embolden the Chancellor Jeremy Hunt as he prepares for March tax cuts.
Galactic noise
Jupiter is paying the price for being a subscale, quoted active fund manager on the public markets when so much of the cash is flowing into low cost, passive investment.
It doesn’t help when another one of your star turns, Ben Whitmore, who looks after £10billion of the £52billion of assets, decides to head off for greener pastures.
A near-15 per cent drop in Jupiter shares leaves the group looking to the stars.
