NSRA Statement

Sparks

Wow. Talk about your cautionary tales!

From the NSRA website:

LT COL J D HOARE
At its most recent meeting the NSRA’s Board of Management considered the outcome of the claim brought before the Employment Tribunal by John Hoare, consequent upon his departure in late June 2005 from the post of Secretary of the Association. Inevitably the ability of the Board to make statements to its members, which were then likely to come more widely into the public domain, was constrained for a progressive series of reasons throughout the nine months to the end of the Tribunal hearing - firstly in honouring the terms agreed at the time of his departure, then during the investigation of aspects of his activities during his employment, and finally once the matter had been referred to the Employment Tribunal and had thus become sub judice.

An interim announcement outlining the decision of the Tribunal was posted on the NSRA’s website on 12 April 2006. The Board is now in a position to make the following fuller statement on the matter.

John Hoare joined the Association in October 1993. Over a period the Board had grown increasingly frustrated by some aspects of the way in which the day-to-day affairs of the Association were being managed. Such day-to-day matters were quite properly the responsibility of the Secretary, but the Board members were effectively being prevented from complying with their obligations as directors of the companies within the group and as trustees of the charity. These aspects included such issues as the failure to maintain a satisfactory management accounting system, so that the financial information received by the Board, on which it based its judgements on past and current performance and planned the future operations of the Association, turned out to be highly unreliable. There was also failure to complete or undertake at all various tasks requested by the Board.

Events came to a head on 23 June 2005, when the Board was presented with the final accounts for the 2004 financial year. The information given to the Board by John Hoare in the preceding months had indicated that progress was being made in improving upon on the modest surplus made by the group in 2003. Indications that results would not be as good as hoped, and indeed to be a deficit, emerged during the latter stages of the audit, but it was not until the final accounts were presented in late June that the full extent of the deficit became known to the Board. In discussions subsequent to the June Board meeting it became clear that Board members had lost confidence in John Hoare’s ability to fulfil the role of Secretary of the Association. A meeting was accordingly arranged for 25 June between John Hoare and Graham Pound (Chairman), Ken Nash (Vice Chairman) and David Lattimore (Treasurer) on behalf of the Board.

In deciding how to proceed, the Board members had to bear in mind their responsibilities as trustees of the charity, in particular to ensure that the funds of the charity, already significantly depleted in recent years, were not used ineffectively. Accordingly, the Board’s representatives sought a resolution which would allow the immediate departure of John Hoare on suitable and affordable terms, and would allow the Association to move as rapidly as possible towards the re-establishment of the group on a sound financial basis.

An employer has a number of options available in relation to the removal of an employee at short notice or with immediate effect:-

* Declaring the post redundant was clearly inappropriate as a replacement Secretary would be needed.

* Instant dismissal would require evidence of gross misconduct. Although there was a loss of confidence, it was not considered at that time that his activities were such as would be guaranteed to uphold a case of gross misconduct if the matter was referred to an Employment Tribunal.

* Suspension on full pay pending an investigation also appeared inappropriate. There seemed to be little that warranted investigation; the Board’s concerns were based on the perceived inability or unwillingness of John Hoare to comply with its wishes and requests.

* A formal warning or the initiation of the disciplinary procedure at another point was also rejected as being not in the Association’s best interests. The Board had lost confidence in him, and his immediate departure was considered to be the only option.

At the meeting on 25 June 2005 John Hoare agreed that he would take immediate early retirement with a payment of six months’ salary in lieu of notice in line with the terms of his contract of employment. The Board’s representatives recognised that this would give him the opportunity to withdraw from the Association with dignity and it was agreed that the Board would limit any comment on his departure to a statement that he had taken early retirement. It was recognised that this would prevent Board members commenting further on the matter at events such as the imminent Shooting Council and Annual General Meeting, even though it was inevitable that there would be pressure, and quite possibly considerable pressure, from members of the Association for further disclosure of details.

There appeared to be a good prospect of the relationship terminating without acrimony on either side. Arrangements were agreed for John Hoare to have access to clear his office the following day, with assistance from two directors of the group, an immediate clearance not being practicable for him because of claimed personal commitments that day. It was also agreed that he might come into the office on Monday morning to inform the staff of his departure. In view of the apparently amicable state of affairs, it was not considered necessary to ask him to hand over his keys or to make other arrangements to prevent him gaining unauthorised access to the Lord Roberts Centre.

Sparks

continued...

John Hoare subsequently telephoned one of the directors requesting a delay of the office clearance until Sunday evening. Late on Sunday afternoon it was reported by telephone to the director (who was also a director of NSRA Limited) by the staff of the Centre that John Hoare had spent some considerable time in his office, was still on the premises and the Centre was about to close. On arrival at the Centre the directors found that John Hoare was sorting the material in his office and he continued the process during the evening. He met the staff on Monday morning and vacated the premises by 9.30 a.m., having relinquished his office keys and other company items. It was subsequently found that papers from John Hoare’s office appeared to have been shredded by him, but there is no reliable information on the type of material involved, including whether they were personal or Association papers.

This was the first indication from which it might have been construed that John Hoare was acting in a manner inconsistent with the amicable separation that had been sought. However there were other indications to the contrary, such as the fact that on early Monday morning he was still sending emails to directors, staff and members of the Association clearing up or transferring items of Association business that remained with him at the time of the interview the previous Saturday.

During succeeding weeks a number of discoveries were made.

1. John Hoare was personally responsible for many of the IT systems in the building. This covered much of the technical management of such systems, including the administration of passwords and access. His son, Simon, had designed the NSRA’s website and acted as webmaster. At that time John and Simon Hoare were the only people with the ability to access the NSRA’s servers from outside the Centre. As a result specialist help had to be called in urgently to re-establish internal control of the Association’s systems, to effect appropriate changes to passwords and other security arrangements, and to identify and secure electronic records. In the course of this work it quickly became apparent that unauthorised entry to one of the servers had been gained from outside the building shortly after John Hoare’s departure, and a server event log had been erased. Furthermore, a significant quantity of documents and electronic files relating to much of John Hoare’s work over the previous two years could not be located.

2. During the course of his employment by the Association, John Hoare arranged overtime payments to himself amounting to approximately £105,000. The payments were considered at the Employment Tribunal, when the NSRA showed that his letter of appointment did not refer to him having an entitlement to claim overtime. However the Tribunal ruled that those overtime payments were not “unauthorised”, (a) because his contract of employment did not specifically state that overtime could not be claimed, and (b) because of the fact that in 1997 a projected overtime payment of £2,000 to John Hoare had been amongst a group of estimated future salaries and overtime payments to the Association’s staff that had been authorised by Graham Pound. The fact that John Hoare was receiving overtime pay was amongst the financial information that had not subsequently been revealed to the Board of Management.

3. Within six months of his appointment as Secretary John Hoare took over personal control of the staff salary arrangements and preparation of the monthly payroll. Examination of the salary records showed that he had increased his own basic salary to levels in excess of those approved by the Board in the annual staff salary review, resulting in overpayments of salary to him totalling approximately £18,000.

4. Scrutiny of old files revealed that John Hoare had regularly taken loans, normally for sums of several thousand pounds. Like many other employers, the Association does try to adopt a sympathetic attitude towards allowing short-term assistance to employees. The number of such loans is small, the amounts involved are normally measured in hundreds rather than thousands of pounds, and detailed terms are laid down for their repayment with interest. The interest rates are modest, but are greater than the cost to the Association in either borrowing the money or foregoing the interest on deposit. However the loans taken by John Hoare did not fit the normal pattern of the Association’s policy and were frequently for several thousand pounds. They were arranged by him at times and for periods that meant they were mostly taken out and fully repaid without the need for any part of them to appear in the Association’s list of debtors at the end of a financial year. All such loans to staff require the approval of a member of the Board and the documents authorizing the loans to John Hoare bore the signature of Ken Nash. It was established that the loans had not been properly authorized, and it was proved that Mr. Nash’s signature had been photocopied onto the documents. In addition it was found that no interest had been paid on two loans, of £4,500 and £5,000, the appropriate interest amounting to several hundred pounds.

As each of the above discoveries was made, decisions were taken promptly about the appropriate outside agencies to be informed or consulted and the action to be taken.

Early on the Association consulted solicitors and was advised that in the light of the serious nature of the findings after John Hoare’s departure, the payment of his six months’ salary should be withheld pending further investigation of possible additional wrongdoing.

The unauthorised erasing of the server event log appeared to be a criminal offence under the Computer Misuse Act 1990 and the police were contacted. For the police to be able to take any action on this matter there had to be agreement that the Association would fund the police examination of the computers, probably costing a sum in the region of £9,000. There would also have been some internal cost and disruption to the Association’s normal working caused by such a police investigation. This matter was not pursued at that time as it was considered unlikely that any action taken would lead to recovery of the costs incurred by the Association in making a prosecution possible.

The misuse of Ken Nash’s signature to authorise staff loans to himself was also reported to the police. In December 2005 John Hoare’s home was searched by the police and he was subsequently arrested and interviewed under caution, when he admitted the misuse of Mr Nash’s signature. He was released on bail and the police passed the papers to the Crown Prosecution Service. The CPS decided not to proceed with a prosecution.

John Hoare had the case referred to the Employment Tribunal in mid-September 2005. In his submission he alleged unfair dismissal and claimed compensation in excess of £80,000. The Association later submitted a counter-claim in the sum of £25,000, the maximum the Association could claim at an Employment Tribunal.

Forensic accountants were employed by the Association to review all relevant records and they advised that a claim against John Hoare for almost £150,000 could be justified, covering unapproved overtime payments, overpaid salary, unpaid interest on loans and interest due on outstanding monies. Prior to the Tribunal hearing the Association withdrew the counter-claim to preserve the option of seeking damages against John Hoare at this much higher level in a separate action in the County Court.

The hearing took place on 3 to 6 April 2006 and the Association was represented by Counsel.

The Tribunal’s decision was that the manner in which the interview on 25 June 2005 was conducted amounted to a dismissal and that it could not be construed as early retirement. It having been found to amount to a dismissal, it automatically followed that the dismissal was unfair as the procedures appropriate to a case of instant dismissal had not been followed. The Tribunal also found that the Association was in breach of contract in withholding the terminal payment of six months salary which had been agreed at the interview on 25 June. Compensation for unfair dismissal plus the payment of the six months’ salary amounted to a total of £24,000.

John Hoare’s claim included a sum of £56,800 as compensation for loss of future earnings. On this matter the Tribunal found that as a result of his actions in issuing false instruments, namely the use of photocopied signatures of Ken Nash to authorize staff loans to himself, he was entitled to no compensation.

Each side at the hearing paid their own legal costs. The cost to the Association amounted to approximately £20,000.

The Board of Management is seeking advice from the Charity Commissioners on the extent to which it may be now be appropriate for the Association to initiate court action to try and recover some money from John Hoare, taking account of the Tribunal’s findings on the overtime payments.

15 May 2006

demonloop

Bast@rd.

Of the highest order.