INDEX

Website updated to 31 March 2011 (including full transcripts of interviews with Group Fraud & Security here and here and letter of dismissal)

Part 1 - Uncovering a scandal (Equitable Life, Lloyds TSB, Scottish Widows and the Financial Services Authority)
   
Part 2 (this page) - The turn of the screw (Reporting to management, suspension, investigation, dismissal)
   
9. Reporting to management
10. Advice of Ethics Advisory Service of the Institute of Chartered Accountants in England & Wales (ICAEW)
11. Reporting to external auditors - PricewaterhouseCoopers
12. Suspension
13. Group Fraud & Security - 1st interview
14. Group Fraud & Security - Will he crack?
15. Group Fraud & Security - 2nd interview
16 Dismissal
   
Part 3 - A banner with a strange device (Follow-up actions)

Part 3 explains what I have done since I was dismissed to follow up:

  • the original whistleblowing matter;
  • the victimization by my management resulting from the whistleblowing;
  • the failure of Scottish Widows' auditors (PricewaterhouseCoopers) to qualify the 1998 accounts of that company on account of the whistleblowing matter.
   
Part 4 - Legal action against Lloyds Banking Group plc, the Parliamentary Ombudsman and the ICAEW
   
 

9. Reporting to management (Top of page)

About two months after the 31 Jan 2002 meeting (see section 6), I raised my concerns relating to the Scottish Widows demutualization with my manager's manager (Roger Cooper, IIA*, Senior Manager, Group Audit, Lloyds TSB), who used to come up to Edinburgh from London once a month for a progress meeting (as IT auditors my manager and I reported to Lloyds TSB Group Audit in London; non-IT auditors reported to the Head of Audit at Scottish Widows, Edinburgh). You will appreciate that, not having investigated the matter fully, I simply informed him that I had been 'put on enquiry' by certain facts, though I made clear the implications of those facts in the Scottish Widows context. His response was to say that the matter was (and I quote) 'way outside your remit' and that I could refer the matter to the Head of Audit within Scottish Widows, as a personal matter, if I so wished. He made it clear that he was not prepared to pursue the matter himself. Roger Cooper's statement that the matter was outside my remit is plain nonsense because an auditor has a duty to investigate, if he has the authority, and, if not, to report, any matter of professional concern that comes to his attention**. Since I have been a Chartered Accountant for over 20 years (which he is not), I am rather more knowledgeable about this matter than he is. My duty was crystal clear.

* Institute of Internal Auditors.

** See ICAEW Members Handbook, section 1.306, 'Professional Conduct and Disclosure in Relation to Defaults or Unlawful Acts' and ICAEW 'Additional Guidance on Ethical Matters for Members in Business'.

10. Advice of Ethics Advisory Service of the Institute of Chartered Accountants in England & Wales (ICAEW) (Top of page)

Given Roger Cooper's response I was not confident that the Head of Internal Audit at Scottish Widows would pursue the matter properly (to be frank, I was absolutely certain that he would do his best to cover the whole thing up). This presented me with something of a dilemma. Eventually, some months later, I approached the Ethics Advisory Service of the Institute of Chartered Accountants in England & Wales (ICAEW), since I was (and am) a member. They advised me (confirmed in writing by a letter dated 13 December 2002 ref: IC/DMD/E25756) to report the matter to the external auditors, PricewaterhouseCoopers. My response to this advice was that it appeared to me that the external auditors must have been aware of the existence of the contingent liability of GBP1.5 billion but that it had not, as far as I was aware, been disclosed in the financial statements (concerning which see the next section). Nonetheless, I agreed to report the matter to them.

11. Reporting to external auditors - PricewaterhouseCoopers (Top of page)

On 11 November 2002 I had a meeting with Karen Lamont of PricewaterhouseCoopers in their Edinburgh offices. She listened to what I had to say and said that she would discuss the matter with the partner responsible for the Lloyds TSB audit, Richard Keers. His response to my concerns was dismissive; he suggested that I might like to contact the Scottish Widows customer callcentre who might have a brochure of some sort.

There's more on PwC in section 29.

12. Suspension (Top of page)

The headquarters of Scottish Widows in Morrison Street, Edinburgh. The arrow indicates the room in which I was suspended (they like to grab you before you get into the building proper).

On 12 December 2002, I was intercepted on entering the office (Scottish Widows headquarters in Morrison Street, Edinburgh) by Alan Rennie, IIA*, my manager, escorted to a meeting room, where Roger Cooper was, relieved of my pass and my portable computer (they were not aware that I had at home - and retained under company rules - a full back-up of the contents of this portable computer) and suspended. I was handed a list of allegations against me, some of which were patently untrue and others which concerned things that were clearly not against company rules. For instance, I was accused of 'being unwilling to go on a course', 'criticizing a report template' and 'amending the holiday spreadsheet'**. It is my view that such allegations were of such a patently ridiculous nature that they undermine the credibility of the whole document i.e. any sane, normal person reading it would just say 'Get real!'. This list of allegations was drawn up by my manager, Alan Rennie.

* Institute of Internal Auditors.

** This spreadsheet was used to allow staff to see when other people in the department were due to go on holiday. I had put in English Bank Holidays against my name because not only was I technically employed by Group Audit in London (and therefore subject to their conditions of employment) and not, like other members of my department, by Scottish Widows in Edinburgh, but I also lived in England.

13. Group Fraud & Security - 1st interview (Top of page)

Here is a full transcript of the meeting. The transcript is rather tedious I'm afraid; it's called the banality of evil. Here are sound files (.wma) of the meeting - file 1 (14Mb), file 2 (2Mb), file 3 (11Mb), file 4 (3Mb) (NB You need to right-click on the link and select 'Save target as' to download the files).

On 20 December 2002 (as a kind of Xmas present, I suppose) I was called to a 'meeting' with Group Fraud and Security at the offices of Lloyds TSB (Scotland) in George Street, Edinburgh. The purpose of the meeting was to investigate the allegations made against me with a view to establishing whether there were grounds for disciplinary action against me - it was an 'investigatory meeting' not disciplinary action itself (but see below). I should say that Group Fraud and Security are, as the name implies, the 'heavies' who are usually called in when a member of staff in a branch is caught with a hand in the till; I understand that they often act alongside the police.

There is, of course, no suggestion that these tactics were in any way:

*Roger Cooper later tried to claim that the members of Group Fraud & Security who had interviewed me had done so not as members of Group Fraud & Security but in a personal capacity since they were the best qualified people for the job. Hilariously, however, the Senior Manager of Group Fraud & Security conducting the interview actually admitted, on tape of course, that she was not an expert in the bank's disciplinary procedures (What!?) and had no knowledge of audit or IT! Clearly, the perfect person to conduct an interview with an IT auditor about allegations relating to his work! Unfortunately for Roger Cooper the tapes of the first interview clearly record the senior manager who conducted the interview saying 'I am a Senior Manager, Group Fraud & Security', with no statement to the effect that she was acting in a personal capacity. She also said that the tapes would be 'held by Group Fraud & Security immediately after the interview and will be retained under secure conditions'. Also, Roger Cooper's letter of 12 December 2002 which required me to attend the meeting said that the meeting was with 'Pauline Sears, Senior Manager, Group Fraud and Security'; there was no mention of her acting in a 'purely personal capacity'. Roger Cooper was fully aware of the fact (and it would be ridiculous for him to try and claim otherwise) that if you summon someone to a meeting with Group Fraud and Security the recipient is bound to interpret that as meaning that they (the recipient) are effectively being accused of doing something which is within the scope of the activities of Group Fraud and Security, that is something very serious indeed, such as fraud. The possible effects of such a letter on someone with a heart condition can be easily imagined.

So Roger Cooper was clearly lying. Mind you, it is easy to see why Roger Cooper would try to make such a claim; it is because calling in Group Fraud & Security before going through any of the procedures laid down in the Staff Manual is such a patently heavy-handed and bullying tactic that it is incontrovertible proof of harassment, which is a civil and criminal offence. Worse than that, if the recipient of such a letter as Roger Cooper's to me of 12 December 2002 suffered heart failure on reading the letter, Roger Cooper would have been charged with manslaughter on the basis that (being aware that the recipient had a heart condition) he should reasonably have foreseen the possible consequence of his action and was reckless as to whether that consequence would occur (in other words, he went ahead in spite of being aware of a consequence that could reasonably be foreseen). This is not just a theoretical question; there is no doubt that Roger Cooper (and his boss, Howard Monks - see below) knew the potential risks to me and went ahead anyway. Put simply, they were quite prepared to risk my life and by choosing to use Group Fraud & Security to carry out the interview knowingly and deliberately INCREASED THE RISK that I was exposed to. THEY KNEW EXACTLY WHAT THEY WERE DOING. Remember, I was, as stated above, rushed to hospital by ambulance from my local infirmary with a suspected heart attack some two weeks after the interview; this was on the instructions of a doctor and after having been given an ECG (electro-cardiogram). To put it bluntly, they bloody nearly killed me.

Not only were my own immediate management (Roger Cooper, IIA, and Alan Rennie, IIA) directly involved but it is my view that they would not and could not have acted without the knowledge and consent of (and, indeed, direct instructions from) Roger Cooper's manager, Howard Monks, IIA (Lloyds TSB Head of Audit, IT & Systems) and his manager, Alan Hubbard (Lloyds TSB Director of Group Audit) who would, of course, have been informed of this matter not only by his staff but also by the external auditors.

Note also that Roger Cooper's letter to me of 12 December 2002 requiring me to attend a meeting said 'you have the right to be accompanied at this meeting either by a fellow worker or a union official'. Section 1.3 of the Staff Manual says that 'At all FORMAL [my caps] stages you have the right to be accompanied by a colleague or a trade union official.' This statement (which is repeated elsewhere in the Staff Manual) is quite specific in limiting the right to be accompanied to the formal disciplinary process and, in addition, no mention is made in the rules of any right to be accompanied during the informal process (which is hardly surprising given that the informal process consists of 'coaching and counselling'). The fact that the right to be accompanied only relates to the formal stages of the disciplinary process means that the meeting was a formal disciplinary hearing; yet the Senior Manager, Group Fraud & Security, stated at the beginning of the actual meeting: 'It is not a disciplinary interview'. Mind you, when I asked 'This is part of a formal procedure, is it?', she said 'Yes, it is'! This is an important point because a formal hearing must be held in accordance with the rules, including a requirement that an HR representative should be present (none was), a requirement that 'you will be given full details of the nature of the complaint against you' (I wasn't - a series of allegations, some undated, and almost all without any supporting evidence, does not amount to 'full details') and a requirement that 'all relevant information [will be] provided to you in good time prior to the start of the hearing' (it wasn't - several files of unindexed papers were given to me just before the meeting). Also, I was prevented from requesting a colleague to accompany me because I was not allowed to contact other employees 'without approval from your line management' (as per Roger Cooper's letter of 12 December 2002) and when I did try to ask someone to accompany me, the person I asked was 'persuaded otherwise' by a senior manager (he told me this directly). A kangaroo court or what? The implications for Roger Cooper and Pauline Sears of their knowing failure to abide by the requirements of the Staff Manual are serious since their conduct (sanctioned by Howard Monks) amounted to a deliberate abuse of the company's rules with the intention of bullying and harassing a more junior employee - a deliberate abuse compounded by the fact that they were both aware of the ridiculous nature of some (and in Roger Cooper's case, all) of the allegations. In fact, as the transcripts and other evidence prove, I had already DISPROVED some of the allegations to Roger Copper (including an allegation I had disproved by reference to time/date stamps on electronic documents - so beyond any possibility of doubt), so he knew they were false.

14. Group Fraud & Security - Will he crack? (Top of page)

At this meeting with Group Fraud and Security they only managed to cover about half of the allegations against me (because they were so numerous). I was summoned to a further meeting in early 2003 but the state of my health prevented this. I had been taken to hospital with a suspected heart attack on 7 January 2003 and was suffering from severe stress symptoms which meant that I spent most of my time on the floor in a state of acute anxiety. During the whole summer of 2003 the state of my health prevented a further meeting (I had a further suspected heart attack on 26 February 2003 and an angioplasty during this period) but my management persisted in the hope, I believe, that I would eventually 'crack' and resign from the bank. Note that on 19 May 2003 my doctor wrote to the bank's healthcare company, in repsonse to an enquiry from them, stating his view that I 'would have considerable difficulty in attending for interview...'.

15. Group Fraud & Security - 2nd interview (Top of page)

Here is a full transcript of the meeting. The transcript is rather tedious I'm afraid; it's called the banality of evil. Here are sound files (.wma) of the meeting - file 1 (6Mb), file 2 (4Mb), file 3 (5Mb) (NB You need to right-click on the link and select 'Save target as' to download the files).

On 2 October 2003 I attended a second meeting with Group Fraud and Security in London (of which I also have a tape and transcript). After this meeting Group Fraud and Security concluded that the allegations against me were 'unsubstantiated' (fax dated 26 January 2004 from Tracey Davies, Solicitor, Lloyds TSB Legal Department, Bristol to Sanderson, McCreath & Edney, Solicitors, Berwick-upon-Tweed). I pointed out to my management at this time (E-Mail of 14 December 2003 to Howard Monks and copied to Martyn Scrivens) that they had no authority to sack me since the company rules state quite specifically (section 1.3*) that an employee can only be dismissed as a result of gross misconduct (which I had never been accused of) or as a result of a proper disciplinary process (which had not even been started in my case).

*Section 1.3 of the Lloyds TSB Staff Manual states, against the question 'Could I be dismissed?', that 'Breaches of conduct will be dealt with in accordance with the prescribed stages of this policy, with dismissal only resulting from the final stage' [i.e. a formal disciplinary hearing - which is subject to an appeal hearing, neither of which happened in my case] or as a possible consequence of an act of Gross Misconduct [which I had never been accused of].

16. Dismissal (Top of page)

Following the investigation by Group Fraud and Security the relevant papers were 'reviewed' by Howard Monks, Head of Audit, IT and Systems. He wrote to me saying that, in his view, the relationship between the bank and myself had broken down and tried to offer me a 'package' while also proposing to falsify any job reference (E-Mail of 26 November 2003). The point is, of course, that:

Some idea of Howard Monks's attitude can be gained from the fact that on 19 June 2001 my then manager wrote to Howard Monks to say that he was 'desperately worried' about me, that I was 'totally stressed out both mentally and physically' and 'on the point of collapse'. Howard Monks did not respond to this E-Mail or to a reminder sent on 26 June 2001. Two months later (September 2001) I had a heart attack. This heart attack was caused mainly by stress at work and the most significant factor behind that was audit management's unwillingness (indeed, absolute refusal) to back up their own staff when they had contentious audit issues to deal with or obstructive auditees; they were far more interested in 'managing their relationships' with senior people within the bank i.e. keeping them happy. An illustration of this was when I was seriously harassed by an auditee in 1999/2000. I eventually started a harassment complaint (precisely because my management would not deal with the situation) and my management did everything they could to obstruct me, even, at one point, ordering not to proceed with my complaint. Here is a report on my complaint, which concluded that I had been bullied. Following my heart attack Howard Monks cut my annual bonus for 2001 by 50% (from GBP1000 to GBP500 - I was saving up for a yacht on that level of bonus!) because, as he said, I had been off work due to illness. Note that my bonus was cut by 50% even though I had been off work for 25% of the year (i.e. 3 months).

See 2001 bonus letter, 2002 bonus letter and my E-Mail to Howard Monks and his reply.

When I refused this 'package', Martyn Scrivens, Lloyds TSB Director of Group Audit, who had recently replaced Alan Hubbard as Lloyds TSB Director of Group Audit (in October 2003 I think), sacked me on 19th December 2003 (another Christmas present - how thoughtful!) citing certain unspecified 'comments' that I had made during the course of the investigation and, predictably, a 'breakdown in relations'. I believe that the date was carefully selected to be just before the Xmas holiday in order to prevent me from applying to an Employment Tribunal for interim relief re-instatement, which application has to be made within 7 days of dismissal (ss.128-132 Employment Rights Act 1996, which applied because I had made a protected disclosure - see s.9 Public Interest Disclosure Act 1998). In fact I managed to apply to an Employment Tribunal by filling in the necessary forms on the Internet between Xmas and the New Year. At this point my wife became involved (without my knowledge). She spoke directly to Howard Monks and 'resurrected' the package that had been offered to me earlier. I accepted this solution (and signed what is called a 'compromise agreement' - designed to keep you quiet - with the bank) for one reason only, namely that I was not in a fit state of health to pursue an action against the bank, which I believed could (was likely to) kill me. It is clear to me therefore that since I signed the compromise under duress it is null and void and will not be enforced by the Courts.

Previous - Part 1 - Equitable Life, Scottish Widows and the FSA

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