The RICS Governance scandal (effectively execs and lawyers, also at times the President behaving poorly): some key extracts from the Levitt report

Further to my previous article ("Who provided the "independent, external advice" to IFoA Council and what was it? Did it consider Charter para 4 and Bye-Laws 17 and 28? If not why?"), Institute and Faculty of Actuaries members (or anyone who is a member of a professional body and wants to be alert to what can go wrong when staff and external legal advisers try and keep things from the governing Council) here are some key extracts from Alison Levitt QC's jaw-dropping report in her 2021 review of RICS.

RICS is the Royal Institution of Chartered Surveyors, the report is the document called "RICS Independent Review Open Version" at https://www.rics.org/news-insights/rics-governing-council-publishes-independent-review-and-accepts-all-recommendations.

All the text below is a direct quote from the Levitt report, with the exception of some parts in square brackets and italics immediately after the page number, which is my summary of the content. The emphasis in bold within the text is mine.

Page 12:

Yet when it came to keeping Governing Council informed, involved and consulted, the Executive felt that the system was unworkable and so largely ignored it.

P13 (Page 13):

I am satisfied that no one genuinely believed that the governance structure did not permit the Management Board to see the reports until the Audit Committee said that it could. It was merely a pretext used to justify withholding the various reports until the Executive could put remedial measures in place.

p15:

The COO’s reasons for keeping the information to herself and within her department were mixed. In part it was due to a desire to maintain confidence within the organisation. This provides an example (and there are others) of the Executive, together with the Chairs of various bodies, ignoring the governance structure of RICS when it suited them to do so and yet doggedly persisting in adhering to it when convenient.

P16:

That is not to say that the CEO thereafter made appropriate decisions in sound governance terms.

Once he became aware of the report’s existence, he should have ensured that it was shared with the Management Board immediately or at the very latest at its quarterly meeting on 27th March 2019. Thereafter Governing Council should have been told about it and given assurance that appropriate remedial measures were being taken. Neither of these things happened.

P17:

I find that the oft-relied upon explanation that the governance structure did not permit the BDO ‘no assurance’ report to be shared was not only based on faulty analysis but was in fact a pretext.

I have concluded that the 25th September 2019 Management Board meeting had been carefully planned and extensively choreographed by the Chief People Officer, General Counsel and Fieldfisher, as well as the Chair of the Management Board. The objective was to ensure that this meeting closed down the Treasury Management Review issue for good.

I find that from the outset of their instruction in this matter, Fieldfisher took a partisan approach, siding with the Executive against the four non-Executive members without any objective analysis of the true merits of the situation. I have concluded that Fieldfisher had more than one potential conflict of interest which they appear either to have ignored or misjudged. I have concluded that their Advice of 18th November 2019 fell short of what RICS was entitled to expect in that it was not balanced and was not in the interests of their client because it did not give RICS an informed choice.

P18:

I find that when, a year later, RICS issued a public statement to the Sunday Times, it was inaccurate and misleading to say that Governing Council had been “kept informed” of all the actions which were taken both at the time and later. In fact, Governing Council was not told anything meaningful until after it was all over.

P19:

I find that there was a failure of governance for the following reasons:

(i) The reporting lines and areas of responsibility are unclear, with areas of overlap which lead to confusion;

(ii) There has been a significant concentration of power in the Executive, particularly the Chief Executive and the Chief Operating Officer, who have become accustomed to deciding what is in the best interests of RICS. They can be over-sensitive to perceived criticism and do not respond well to challenge;

(iii) There are sectional rivalries, with various bodies and individuals being jealous of their perceived areas of responsibility;

(iv) There has been an over-dependence on rules, process and external legal advice at the expense of good judgement, sound governance principles and plain common sense;

(v) There has been weak leadership at Chair level; and (vi) The Chief People Officer failed to understand that her duty is to the organisation as a whole and is not merely to protect senior staff from criticism.

P20:

The provision of updates to Governing Council is the responsibility of the Chair of the Board or Committee and should no longer be undertaken by the Chief Executive or any other member of staff.

P21

General Counsel or the Head of Legal should not have a pre-existing relationship with RICS’ external legal advisers.

P23 [Alison Levitt QC criticises the appointment of Fieldfisher to advise RICS on the independent review, since they had provided the legal advice which the RICS President relied upon to dismiss the 4 non execs from its Management Board, a central point of contention]

Conflicts of interest are as much about the appearance of bias as about actual bias.

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P25:

Despite numerous attempts, I never succeeded in persuading them to give the Independent Review equal prominence with the internal governance review.

It felt as though RICS was making it as difficult as possible for people to contact me. This may not have been their intention but that was the impression given. Given that the Independent Review was the wish of Governing Council, this suggests something of a disconnect between the senior governance body and management, a matter to which I shall return later in this report.

Initially RICS provided me with a set of redacted documents. I rejected this: as the Independent Reviewer it is for me to decide what is relevant and what is not. RICS then provided me with all documents in unredacted form. When I have asked for additional material, in the main it has been provided without difficulty. When I have asked for additional resource (for example, to take some advice from a solicitor who specialises in employment law as that is outside my area of expertise) this was granted without difficulty.

The exception to this was the various Fieldfisher files, where there was pushback on the grounds of legal privilege, relevance and proportionality. Eventually, RICS purported to disclose all the files, though I believe (on reasonable grounds) that I am missing a number of relevant documents, some of which might be very significant. I know for a fact that Fieldfisher withdrew from the file their internal correspondence on the ground that it does not belong to the client. Whilst I disagree with this assessment as a matter of law, there came a point where I was not prepared to spend more time attempting to prise documents out of an unwilling RICS or Fieldfisher as I already have sufficient to form an opinion.

P27:

To ensure that as many people as possible would know about the Independent Review we set up a website (which went live on 30th April 2021) and, through Kingsley Napley, issued a press release to publicise it.

RICS has no control over the website.

In order to encourage participation from as many people as possible, I did three things:

(1) I sent letters to all those who appeared to have potentially relevant evidence to give, enclosing a copy of my revised Terms of Reference, and inviting them to contribute;

(2) On 30th April 2021, I issued a public Call for Evidence and drafted a questionnaire to accompany it

and

(3) I sent an individual email to all 130,000 RICS members. This was done by RICS on my behalf?

P36:

Certainly I have seen references in some sets of Minutes to the fact that during the period in question there had been no whistleblowing incidents. In an organisation the size of RICS, this should be a cause for concern not congratulation. Had I more time I would have investigated this matter; it may be something which RICS should consider.

P45:

RICS has some 140,000 members in 146 countries. The majority of its members are in the UK. It has two primary sources of income: membership fees and income from events such as conferences and CPD courses. RICS is intended to be profit-making, but because there are no shareholders, it does not distribute dividends. Instead, any profits that it makes are ploughed back in to advancing its purpose as a professional body with a public interest purpose. It is not a commercial organisation as such, but its annual turnover is in the region of ￡80 million.

Its position as the holder of a Royal Charter is a reflection of its high status. Royal Charters are normally reserved for bodies which work in the public interest and which can demonstrate pre-eminence, stability and permanence in their particular field.

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P55: [referring to RICS General Counsel, who had trained at Fieldfisher, and then been on secondment to RICS before becoming GC there]:

However, I have concluded that in performing her role in relation to these events, she placed excessive reliance on advice from her previous employer, Fieldfisher, who were RICS’ chosen external legal advisers. It may be that her inevitable professional closeness to the firm that trained her was at least partly the cause of this. In any event, it did not serve her well.

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P57: [COO made the Director of Risk and Assurance redundant after he disclosed the existence of a "no assurance" report to 2 non execs during a Risk Sub group meeting]

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P79:

Given that the amount was nearly half a million pounds, an unbudgeted-for discretionary bonus of this size is surprising in and of itself. I note in passing that it is the Chair of the Management Board who is responsible for performance-managing the CEO and recommends his remuneration. He also sits on the Remuneration Committee.

If this very large bonus payment was known (in the sense that if the CEO met various targets, the payment would be triggered) then for some reason this had not been factored into the cash flow forecasting.

Either way, this does not reflect well on RICS’ financial functioning.

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P81:

As set out above, the bank charged ￡15,000 for arranging the overdraft plus ￡1000 interest on the excess of ￡4m. I asked the COO whether this wasn’t a waste of money, but she felt that the amounts were not significant. In the overall scheme of things, that may be right, but I make the observation that this is members’ money and care should be taken for that reason alone.

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P86:

BDO told me that RICS staff were unaware of information such as the number of bank mandates that RICS had for international bank accounts: they initially thought they had eight but it turned out to be more than 60. In short, the system was so poor that RICS could not even provide sufficient information for BDO to perform the testing that it would normally do.

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P87:

I am troubled by both the COO’s explanation and the CEO’s apparent acceptance of it.

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P93:

Perhaps the clearest indicator of the seriousness of BDO’s conclusions is that the Director said he had been doing this since 2007 and he could not think of any other Treasury Management audit that he had given two “red” ratings to. The partner said that a ‘no assurance’ rating in Treasury Management was such a rare occurrence that he did not think he had ever issued one before, “because it is such a fundamental area for business to get right. You run out of cash, you don’t exist.”

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p94:

That said, in this instance I accept his evidence because it is supported by that of the two BDO partners, who clearly had no motive to exaggerate their findings (rather the opposite). There is also the question of common sense: you do not need to be a financial expert to understand that:

(1) not knowing how much cash you have and being ‘out’ in your calculations by ￡3m over a period

of 2 months, and

(2) having more than 70 bank accounts in various parts of the world that you did not know existed, what was in them or who had the authority to run the accounts

amount to a serious situation.

I find that the COO has downplayed the seriousness of it because she was responsible for the fact that this situation had developed. This was not merely because as COO she was the person ultimately accountable for the finance function, but because she had run the Finance Department for many years and these were failings which plainly had not developed overnight.

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p97:

I do not accept the COO’s evidence on this matter. The conclusions I draw from this are set out in Chapter 8.

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P99:

In my view this is a less than frank explanation. The CEO did not tell Governing Council that the flawed cash flow forecasting had led not only to the need for an overdraft extension at short notice, but that the extension had been for an extra ￡3m, three times more than had been ultimately required. I have concluded that this was a deliberate decision made in order to provide the most positive picture to Governing Council. To describe it as keeping Governing Council “fully sighted on performance risks” is disingenuous.

Unsurprisingly, there was no mention of the draft ‘no assurance’ Treasury Management report from BDO, given that the COO had made no mention of it at the Management Board and the CEO knew nothing about it. It follows that no criticism should be made of the CEO in respect of this aspect, save in the broadest possible sense of the fact that he was the COO’s line manager.

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p100:

One of the interesting questions is why it was the CEO who was giving Management Board updates to Governing Council rather than the Management Board Chair. The previous Chair had always either done it himself or ensured that it went out in joint names. Either way, he had what he described as a “big hand” in its drafting.

The current Chair told me that when he took over, he had decided to ask the CEO to do it, on the ground that it gave the CEO more visibility. I have concluded that this was a poor decision. It gave the impression that the CEO was running the Management Board. It also gave the CEO control over what Governing Council was told. I am aware that the CEO does not accept this and says that the Chair or any member of the Board could have added to it had they wanted to. That may have been the theory, but I am satisfied from the evidence that it would have been a brave person who chose to tell Governing Council more than the CEO deemed appropriate. As matters were to unfold, when the four non-Executives were felt to be threatening to tell Governing Council about the Treasury Management matter, this was one of the reasons given for their dismissal.

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p103 [COO not informing Finance Ctee Chair about a damning "no assurances" report from BDO]:

What is absolutely beyond doubt was that she did not tell him that there was an audit which had been completed, nor that she had known since early December that BDO had given a ‘no assurance’ rating

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P104:

It follows that if BDO was correct that the issues they had uncovered represented a threat to RICS, then for four months, no one other than the COO and her team had known anything about it. Given that unquestionably these were the same people who were responsible for the situation arising in the first place, this is a significant cause for concern.

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P109:

I have concluded that it was not so much a question of the COO withholding it, as of her using the governance structure as a justification for delaying telling the CEO and the Management Board. This would buy more time to start putting things right. I cannot think of any other reason why she would not give the CEO, to whom she was professionally close, a ‘heads up’ at an early stage.

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P111:

This is a surprising response. Had the CEO been concerned about having been kept in the dark, as he told me he was, one would have expected him to have reassured the Director of Risk that he had done nothing wrong. I have concluded from this that the CEO did not disagree with the COO’s policy of playing her cards close to her chest.

In November 2020 the Director of Risk was made redundant, having previously been placed on furlough.

The COO told me that RICS had had to make cost savings of ￡20 million during the Covid-19 pandemic, and this role was removed as it was decided that the organisation needed “a lighter touch on risk”. I reflect that making the Director of Risk redundant in the midst of a pandemic seems a rather extraordinary thing to have done.

Page 111 and 112: [COO misinforming Council]

This is interesting for two reasons. First, the COO was saying unequivocally that she had instigated the BDO Treasury Management internal audit as a result of the cash flow (overdraft) issue that arose in November. That is plainly untrue. When I interviewed her she denied that she had ever said this.

P 113:

Secondly, this posting acknowledged the existence of the internal audit report, but made no reference to the ‘no assurance’ rating.

Rather, the emphasis was on the remedial steps which were being taken.

There are echoes here of the CEO report to Governing Council following the 12th December 2018 Management Board meeting: minimising the seriousness of the issue whilst focusing on the proposed solution. The problem was that it turned out to be many months before there was a satisfactory solution in place.

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P158:

The Management Board Chair asked General Counsel to send the Simon Hardwick email chain to the President and the CEO, which she did on 31st July 2019. I have concluded that this is one of the earliest examples of “sides” being taken. Simon Hardwick’s email had been addressed only to the Chair of the Management Board. It was then shared, without his knowledge or consent, with the very people about whose behaviour concerns were being expressed. I do not understand why the Chair of the Management Board thought this would be helpful or why he felt that the Executive needed to know what was being said. I have concluded that this is an example of his being too close to the CEO. Similarly, General Counsel should have invited everyone to pause and reflect.

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p159: [CEO being too defensive and showing that he disliked being challenged]

This was an unhelpful response. The CEO knew perfectly well that this matter had been badly handled at the outset, as evidenced for example by his email of 27th June 2019. I have concluded that he was very quick to take offence and this can only be because he disliked being challenged. He should not have been so ready to start talking about “employee issues being raised”, because this inflamed matters, as events were to show.

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P169:

This provides evidence of the COO and General Counsel deciding what the Audit Committee Chair should say.

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P180:

When I interviewed the COO I had not yet been given the Fieldfisher file. I had asked her (as a genuine question) whether she knew about any external legal advice having been taken about this whole matter.

Her reply was “No, I would not have been involved in that”. That is demonstrably untrue. It was she who first gave the instructions to Fieldfisher on 20th August and, as the remainder of this chapter will show, she was present on many of the calls and at many of the meetings, up to and including 13th and 14th November. Indeed, at her own request, she was provided with a copy of the Fieldfisher’s “termination” advice of 18th November 2019.

The COO is not the only person to have downplayed the extent of Fieldfisher’s involvement: it has proved something of a consistent theme. The CEO told me that he did not have any personal legal advice but remembered one meeting with Fieldfisher “way back”. He couldn’t remember the precise conversation but he might have been trying to get straight in his own mind what the governance system was. Fieldfisher had been extremely helpful to the organisation over the years in trying to navigate the Bye-Laws etc.

The evidence shows that this is not a candid or transparent account of the CEO’s knowledge of the part played by Fieldfisher. I examine this later in this Chapter.

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p181:

General Counsel also noted that the Management Board Chair was due to meet with the CEO and the Audit Committee Chair and had asked that General Counsel join him and the CEO afterwards to discuss the approach. In other words, this provides evidence that part of the Management Board was getting together to discuss the special meeting in advance, together with the Chair of the Audit Committee.

Those who have made representations to me have sought to convince me that there was nothing unusual about all of this pre-planning. I disagree. In my view it is most unusual for a Chair’s speaking note in such a situation to be prepared by external lawyers. Further, I have concluded that it was objectionable for any lawyers, but especially those who had a predetermined view of the matter (including having formed a baseless conclusion that Simon Hardwick was trying to undermine the Chair), to be giving covert advice to part of the Board as to how discussion should be curtailed. It has to be remembered that Management Board is the senior delegated governance body with operational authority at RICS. The clear impression given is that Fieldfisher were deciding what should happen at that meeting. The fact that they may have believed that they were acting in the best interests of RICS is neither here nor there. Neither General Counsel nor the Chair should have allowed this to happen.

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p183:

This is an important email because it provides evidence that part of the Management Board was in the inner circle, whilst the non-Executives were kept in ignorance of significant matters. These included the pre-planning of the special meeting, the involvement of Fieldfisher and the fact that the conclusions of the review had already largely been decided. I have concluded too that it is difficult to understand why the COO needed to see the Chair’s briefing note in advance.

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p236:

The above demonstrates beyond doubt that the entire Management Board meeting was to be choreographed in advance and in detail. It is notable that the Chief People Officer even sought advice as to how the Management Board Chair should explain her presence in the meeting and what should be said to justify it. When the Chief People Officer gave evidence to me, I had not seen this email.

I asked her why she had been present at the 25th September Board meeting. She said that she was there to protect the interests both of the RICS employees and the non-Executive members. The above material, taken together with the other evidence that I have read and heard, demonstrates that she was being less than candid with me.

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p277:

It is my view that the note reveals that this meeting, if not amounting to a formal conflict of interest in the regulatory sense, was deeply unwise. Parts of what was said during it were not in the interests of Fieldfisher’s client. Throughout the meeting Matthew Lohn gave unequivocal advice on the following themes:

(i) The non-Executives had to go;

(ii) The President and the Chair were letting the organisation down by not dealing with this in a robust manner; and

(iii) The CEO and the COO should issue threats to encourage the President to take action.

The effect of this meeting was that Fieldfisher handed the pistol to the CEO and COO which would subsequently be held to the head of the President.

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p 282: [Fieldfisher giving advice to the wrong client]

This is not, as it is suggested, advice to RICS, in the sense that it is advice to the controlling mind or embodiment of RICS. It is advice to the Executive as to how to persuade the controlling mind into a particular course of action.

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P289: [Fieldfisher considering withholding information from their own client]

Fieldfisher also emailed General Counsel about the communication to Governing Council. They stated:

“our initial view is that there may be some merit in considering whether a statement [to GovCo] that divulges less information (and is therefore less provocative in some senses) could be worthwhile”.

I am concerned, but not surprised, that it was even contemplated by Fieldfisher that they would consider withholding information from their own client.

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P291:

It is quite clear, as a matter of law, that Governing Council is the ‘controlling mind’ of RICS.

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P293: [CEO being less than frank with the independent reviewer]

The CEO told me that he had told the President that he was finding the situation untenable, and that if the President thought it better for RICS that the CEO should have a conversation with him about his own position, and it would provide a solution, then fine. He told me that did not think he had seen the non Executives’ letter of 11th November. I have concluded that not only had he plainly seen it but that this was something he could not possibly have forgotten and therefore he was being less than frank with me.

The evidence for this is contained in the notes of the meetings on 13th and 14th November 2019, which make it clear that it was this letter which was preoccupying everyone. Indeed, the Fieldfisher advice of 18th November 2019 (which the CEO had undoubtedly seen) is predicated upon that letter.

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P300:

The Chief People Officer told me that she felt the whole issue stemmed from a misunderstanding of the duties of Management Board. There had been a desire to do the right thing. But the non-Executives should have recognised the hurt caused by their perhaps unintended allegations against the CEO and COO. They were not particularly respectful of the Chair. They were seasoned non-Executives and the way in which Board members conduct themselves is critical. She said they were all very conscious of the track record of the four and the fact that it took twelve months to bring the matter to a head would suggest how keen they all were to get back to a functioning Management Board. The hours they put in to try to resolve this amicably at every stage could not be underestimated.

I struggle to reconcile some of these observations in the light of the evidence from the Fieldfisher file. It is certainly correct that many, many hours were spent on this matter, but I see very little if any evidence of an effort by the senior leadership to be conciliatory and to build consensus. Rather, their energies were concentrated on finding a way to get rid of the four non-Executives.

As the Governing Council meeting on 2nd December 2019 approached, there was focus on determining what the Council was to be told. In my view this was about “optics” rather than substance.

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P312:

That next Management Board meeting took place on 12th December 2019. The Minutes of that meeting record that the amended draft Minutes of the last meeting were approved. There was no mention of the fact that the four had asked that their disagreement be noted. The only reference to their departure was that there had been a “detailed” discussion at Governing Council, which had been disappointed but had accepted the need to move on.

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P315:

On 21st January 2021 there was a further Special Meeting of Governing Council, which voted unanimously in favour of an Independent Review. It is of note that Matthew Lohn of Fieldfisher not only attended the meeting (which I regard as unusual) on the basis that legal advice may be needed, but also spoke. I regard this as having been inappropriate. It must have been apparent to Mr Lohn that his Advice of 18th November 2019 was likely to be central to such a review.

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P320:

(1) I have seen no record of advice, either from Sheridans or Fieldfisher, as to not merely whether as a matter of law what the GC2019 members had said was defamatory (which in my view was debatable) but the broader question of the wisdom of sending this letter; and

(2) It is my view that the members of RICS will be very surprised to learn that, in effect, their subscriptions were being used for their external advisers to use a second law firm to send a threatening letter to other members of the Institution.

What is without questions is that at 2240 on 20th January 2021, the members of GC2019 each received a letter from a top media law firm, on behalf of RICS, threatening legal action for defamation in respect of the further circulation of their letter, and giving them until 10am the following day to respond. I remark in passing that one of the charges levelled against Simon Hardwick was that he had sent his email of 26th July 2019 to the Chair of the Management Board at just before 10pm. On any view, that was a considerably less disturbing and upsetting letter than that sent to the GC2019 members. As will be apparent, there was literally no prospect of all these surveyors being able to obtain legal advice within the time frame they had been given to respond. It is my view that this went further than a serious error of judgement and looked very much like bullying.

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P323:

The CEO said that in his view there was nothing misleading about saying that Governing Council had been kept “fully informed”: they had had two sessions and the Council could have taken it where they wanted.

The evidence that I have set out in this chapter has driven me to the conclusion that it was indeed misleading to say that Governing Council had been ‘kept’ informed. The use of ‘kept’ carries the clear implication of an ongoing line of communication, when the truth is that Governing Council were told the bare minimum until after the four non-Executives had been dismissed.

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P340 [General Counsel and Fieldfisher omitted to check the RICS Bye-Laws]

For the reasons I have already given, it is beyond doubt that the Terms of Reference are subordinate to the Bye-Laws. It follows that the Bye-Laws override any other provision that was relied upon by General Counsel and Fieldfisher. I have seen no evidence that either General Counsel or Fieldfisher ever looked further than the Terms of Reference when they were conducting their internal governance review. They should have done so, as the Regulations make explicit. For example, by virtue of R7.1.4:

“Every person involved with a board, committee or group carrying out duties or functions under the Charter, Bye-laws or Regulations or otherwise acting on behalf of RICS, shall:

(a) act in accordance with the Charter, Bye-laws, Regulations, strategy and policies of RICS and any

relevant terms of reference or Standing Orders published from time to time” (emphasis added).

I am satisfied that they never thought to look at the other sources of RICS’ legislation. Had they done so, and had they felt that for some reason they were free to disapply the Bye-Laws (though I cannot see how that would have been a legitimate conclusion to have reached), it would have been inevitable that they would have said so, in order to give their reasons. The fact that they did not satisfies me that it was something they collectively overlooked.

I would have liked to have asked Matthew Lohn about this. I explicitly drew this conclusion to his attention as part of the Representations Process but his lawyers chose not to address it save than to say, in effect, that I am entitled to my opinion.

I am therefore satisfied that the conclusion reached in the internal governance review, namely that there was no breach of governance, was wrong. The review did not consider the relevant provisions and did not apply the correct test; thus its conclusions were fundamentally flawed.

I have concluded that had Fieldfisher considered B9.1.3 this might have led to an entirely different outcome and in all probability the four non-Executives would not have been dismissed. General Counsel must bear part of the responsibility for this, although doubtless she would say that she relied on Fieldfisher’s advice.

This question of the failure to consider the Bye-Laws may be something which RICS wishes to pursue with Fieldfisher.

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p373:

Looking at the 18th November written Advice in the round, it does not read as the provision of advice upon which RICS could come to an informed decision. It appears instead to be a document drafted in order to fortify a decision which has already been made, more like a skeleton argument to be advanced in adversarial proceedings. It puts the case for dismissing the four non-Executives at its highest. In other words, it is designed as a document that may be relied upon by RICS, should its decision to dismiss the non-Executives later be subject to scrutiny.

In circumstances where full and balanced advice had previously been given and the client had then been able to come to an informed decision, it might be argued that there is nothing wrong with providing such advice, although the way it is phrased might still raise an eyebrow. But that is not the situation here. All the evidence demonstrates the opposite: that partial and partisan advice had been given from the outset in order to sustain and support a decision that the CEO, COO and Chairs should be protected at all costs.

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P370:

Secondly, was the manner in which the four pursued their concerns in breach of the above provisions?

Again, this can be answered shortly. There is no doubt that the language used by some of them, and Simon Hardwick in particular, became increasingly robust from late July 2019 onwards. That said, context is everything. I find that they had patiently and courteously pursued their legitimate concerns over many months. They had waited when told to wait, but were faced with delay after delay, with no meaningful information being provided and no resolution of their concerns in sight. In this context, the increasing exasperation and anxiety of this group was reflected in the language that they used, as they became more nervous as to the motive behind - and reason for - the failure to provide them with information such that they could discharge what they considered to be their obligations and duties to the organisation.

In the light of my findings as to the motives of the Executive, their anxiety was justified.

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P388:

The choice she made was to have far-reaching consequences and for that she must bear responsibility. I am satisfied that if she ever was in the habit of behaving transparently, by December 2018 she had got out of it. When I interviewed her, I asked her what ‘governance’ meant to her. She replied that it was having well-embedded systems of delegation where everyone knew their role. She did not mention transparency, even though I deliberately asked her a second question, namely ‘what does good governance look like’ in order to see if she would.

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P391:

Having considered the extensive evidence, I am satisfied that the COO and the Chair of the Audit Committee agreed between them that none of the BDO reports would be shared with the Management Board until such time as they chose to do so. The motivation of each may have varied as between each other and over time, but the outcome was the same.

The Chair of the Management Board is a good, intelligent and conscientious man. He takes everything to heart, worries extensively and tries hard to do the right thing. I have concluded that the problem was that he was too close to the CEO. He knew instinctively that the Management Board needed to have oversight of the BDO reports and the action being taken to remedy the issues and so he tried to obtain them, but as matters became polarised, he chose the side of the CEO and the COO. I am sure that the reason he did so was that he believed that RICS could not survive without the CEO and the COO and they had taken up entrenched positions. I am equally sure that he relied heavily on the legal advice given by Fieldfisher.

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P392:

I am satisfied from the evidence of the witnesses to whom I have spoken and the material I have seen that no one genuinely believed that the governance structure would exclude Management Board from seeing the reports until the Audit Committee said that it could. It was merely a pretext used to justify withholding the various reports until the Executive could put remedial measures in place. The truth was that the Executive did not want Governing Council to “interfere” in the running of RICS because it made it difficult for them to do their job. There is a telling remark in an email from the Audit Committee Chair in which he refers to:

“the danger of GC reverting to the sins of the past where it sought to question and interfere in duties it had delegated to management”

I am satisfied that over the years the CEO and the COO have become used to operating largely without check. They believe that Governing Council is rather like a group of children which does not know what is in its best interests and on whose behalf decisions have to be made. They decide what the various governance bodies are told, when and how. I gained a very strong sense from the CEO that, polite and friendly though he was, he was exasperated by finding himself sitting opposite me answering questions about the Treasury Management issue. I hope I do not do him a disservice when I summarise it by saying that he believes he has tried to get RICS to adopt a more functional governance structure; RICS having rejected it, he just decided to get on with the job in the way he thought best, otherwise the organisation would have suffered. As a principle, this is a precarious approach to take in any organisation.

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P393:

Throughout this episode RICS was not well-served by its lawyers. No doubt those reading this report will think that it is richly ironic that I, a senior barrister, have concluded that RICS has been too dependent on external legal advice. I am sure that Fieldfisher and other lawyers have given RICS much sound advice over the years in relation to what I would describe as legitimate legal matters, but the lawyers were seriously over-used here. What was needed was not legal advice but judgement, common sense and the courage to stand up to the Executive as appropriate.

P394:?[The Executive and RICS senior leadership including the President concealed the extent of Fieldfisher's involvement from Alison Levitt QC for a long time]

I believe that the Executive and the senior leadership know in their heart that this is right, because nothing else would explain the extraordinary lengths to which they have all gone to conceal from me the extent of Fieldfisher’s involvement. When I finished conducting the witness interviews I had not been given the file and I believed - because that is what I had been led to believe - that Fieldfisher’s part had consisted solely of the preparation of the 18th November 2019 Advice that resulted in the dismissal of the four members. The only reason I asked to see the file at all was because I was puzzled by the unequivocal and uncompromising nature of that Advice. I remarked at the time that it read not like an Advice but like a document written to give legal ‘cover’ to a decision which had already been taken. Yet when I interviewed him, the President was adamant that he had read that Advice with an entirely open mind. I asked to see the file because I wanted to understand the nature of the instructions which had been given to Fieldfisher and who had given them. I expected the file to contain possibly four or five documents. What I received truly astonished me. It can be seen from Chapter 6 how extensive Fieldfisher’s involvement was, yet everyone had hidden it from me.

Events from late August 2019 onwards felt like the cover-up of the cover-up. Both were unnecessary, unplanned and should not have been allowed to happen.

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P413:

Good governance is about more than systems of delegation. For an organisation to be the best version of itself, its governance system must include the subtle qualities of openness and transparency, ethical conduct (including fairness to all members, whether employees or non Executives), accountability and openness to change.

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P416:

As a short-term measure, Governing Council should commission an over-arching statement which emphasises that culture and behaviours such as openness, transparency, ethical conduct (including fairness to all members, whether employees or non-Executives), accountability, collegiality, cooperation and openness to change are as important as governance structures.

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Consideration should be given to whether financial bonuses at senior Executive level are appropriate for a professional membership organisation.

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There should be an overhaul of the whistle-blowing structure. There needs to be an alternative route (to an independent third party with standing or authority) if the complaint is made either by, or concerns, a member of the senior leadership team. The fact that a whistle-blowing hotline is never used should be a cause for concern, not complacency.

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P417:

For the future, there should be a framework setting out the parameters for seeking external legal advice and stipulating who can give instructions. There may be levels of spend for which authorisation should be sought from Governing Council. Advice from external legal advisers should be non-partisan and should always be given in the clear recognition that the client is RICS itself, not any part of senior management. It should be limited to genuinely legal matters and should not extend to matters of strategy.

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