67 Virtual Brochure – March 2025 Recent corporate governance failures The Horizon IT scandal, also known as the British Post Office scandal, is thought to be one of the most significant miscarriages of justice in UK history. The Institute of Directors (IoD) has observed that As well as representing a monumental miscarriage of justice, the scandal may well turn out to be the most significant failure of governance in recent decades6. Corporate governance is a key investigation of the current Public Inquiry, which has appointed two experts to produce reports on governance and culture at the organisation. Their work will include evidence addressing the corporate responses to the scandal and what arrangements were in place within the Post Office and government to ensure appropriate governance, management and oversight. The UK Covid-19 inquiry, which was launched in June 2022, has recently begun its reporting. The first module (July 2024) focuses on the resilience and preparedness of the United Kingdom. Future reports will focus on specific areas, including core UK decision-making and political governance. Module 1 reports, inter alia, that amongst other governance failures, The UK prepared for the wrong pandemic and a UK funded research project is considering how ethical advice could be best incorporated into government decision making systems.7 The Grenfell Tower Inquiry recently found that the Royal Borough of Kensington and Chelsea’s company that ran social housing, known as a Tenant Management Organisation (TMO) had been persistently indifferent to residents’ needs and failed to observe its responsibilities and, more broadly, that there had been a failure to establish who was responsible for safety standards.8 The Infected Blood Inquiry has revealed a series of severe governance failures by successive UK governments, the NHS, and blood services, including unethical practices and failures to prioritise patient safety9. 6 Governance questions for the Post Office Horizon Inquiry | Blogs | IoD 7 https://blog.bham.ac.uk/ethics-expertise/2023/12/18/ethics-and-expertise-in-times-of-crisistakeaways-from-the-advisory-board-meeting/ 8 Grenfell Tower Inquiry The results of these inquiries and their investigations into corporate governance failures are certain to impact upon corporate governance arrangements across all sectors. This is likely to include the role of the board in holding the executive to account, the robustness of its testing and receiving assurances on risk management, and effective business planning. These inquiries have highlighted deeper concerns however – around corporate accountability, ethics and ethical decision-making. The Institute for Government said of the Post Office scandal Collectively….there was a lack of clear accountability….. This is not just a question of who should have spotted and acknowledged the problem, but who should have driven its resolution over time. On ethics and ethical decision-making, the misuse of legal professional privilege in the Post Office scandal is illustrative of a deep ethical breach and a potential legal misconduct…it not only jeopardizes individual rights but also erodes public trust in legal institutions and mechanisms10. The Institute of Directors has observed that we need to reform directors general legal duties within the Companies Act 2006 – to make it crystal clear to directors that their role is not to prioritise the short-term financial interests of shareholders. Rather, they should see their duty as promoting the long-term success of the company in a manner that is consistent with its broader purpose, including the interests of all of its key stakeholders11. 9 Government Update on the Infected Blood Compensation Scheme: 16 August 2024 - GOV.UK (www.gov.uk) 10 Six lessons government should learn from the Post Office scandal | Institute for Government 11 Governance questions for the Post Office Horizon Inquiry | Blogs | IoD
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