A REPORT BY the government’s trade union regulator – known as the ‘certification officer’ – has found that there were serious shortcomings in governance procedures, record keeping and understanding of rules in relation to substantial exit payments made as part of ‘settlement agreements’ to employees of the Fire Brigades Union between 2010 and 2024. A number of the employees had made complaints of workplace mistreatment, and the payments were, in all cases, covered by non-disclosure clauses.
The damning report, which was published yesterday, exposes a dire lack of transparency and accountability, as well as woeful oversight of key financial decisions, at the top of the union. It sets out a number of recommendations for improvement and warns the union that a failure to address the shortcomings may result in further inspections in the future.
The report marks the latest development in the ‘hush money’ scandal – first exposed by this blog – which has plagued the FBU for the past three years and resulted in questions in parliament and coverage in Private Eye magazine. It also represents the first major test for new general secretary Steve Wright, who took over from Matt Wrack four weeks ago.
The certification officer, Sarah Bedwell, began to look into the exit payments in July 2023 after receiving a complaint from a number of members and former officials of the union. The complainants alleged that the payments, which ran to hundreds of thousands of pounds, were decided by a tiny cluster of the union’s most senior officials and without the approval – or, in some cases, even the knowledge – of the ruling executive council.
After a year of correspondence between her office and the union, Bedwell concluded that there were grounds to believe union rules may have been breached in relation to how the payments were signed off. She exercised her authority under the law to appoint an inspector to carry out a full investigation – only the fourth time this century that the certification officer has appointed an inspector to look into alleged financial irregularities in a union.
The inspector, Michael Kidd, took evidence from 27 individuals, all of them current or former employees or officials of the union. In his 36-page report, Kidd found that:
- On several occasions, employees of the union departed with settlement agreements, which included financial payments.
- The agreements included confidentiality clauses (meaning that the employees were prohibited from speaking about the circumstances or terms of their departure).
- There was no conclusive evidence that rules had been broken but, crucially, neither had the union been able to demonstrate that it had properly followed the rules. (‘This should be a matter of concern for the union and its members,’ said Kidd.)
- The leadership at the time had no common understanding of the relevant union rules.
- There were no written protocols governing exit payments, and senior officials were at odds in their understanding of where authority lay for authorising the payments.
- In the case of each departure of a national officer under a settlement agreement, the leadership claimed that the executive council was informed of the existence of the agreement. In reality, there was nothing in the minutes of the relevant executive council meetings to support such an assertion.
- The leadership claimed that a sub-committee of the executive council – the finance and administration committee (FAC) – had been granted delegated authority to agree settlement payments. Yet there was no evidence to support this, and several executive council members – some of whom were themselves members of the FAC – disputed it.
- On at least one occasion, a settlement agreement between a departing national officer and the union was signed by both parties before it went to the executive council for agreement.
- The leadership at the time received advice from the union’s lawyers that it could provide certain information to the executive council in relation to the circumstances and terms of the national officer’s departure. The evidence suggested that the leadership failed to provide this information.
- The official minutes of executive council meetings were often inaccurate and imprecise.
- A culture had developed in which little confidence was placed in the minutes of executive council meetings. People were left with no option but to rely on their own memory or notes.
- There were significant flaws in record keeping, information management and document retention. (When requesting documents for the purposes of his investigation, Kidd was often told ‘they cannot be located’.)
- There was no basic suite of HR policies – such as disciplinary, grievance, capability, or absence management – covering employees of the union.
- There was no evidence of an agreed approval process for settlement agreements and barely any documentation showing how the agreements had been reached.
- There was no evidence of any recording or reporting process for settlement agreement payments.
- The union had failed in its legal duty to declare allowance payments made to senior officials on its annual return to the certification officer.
- Information management, record keeping and document retention procedures were seriously deficient. There was little oversight, and executive council members were often forced to rely on their own ingenuity.
Kidd went on to make several recommendations, including putting measures in place to foster a common understanding of the rules, establish clear protocols for boundaries of authority, improve the quality of minute-taking at executive council meetings, and tighten procedures for information management.
What is clear from the report is that a major cultural change is required at the top of the union. Too often, senior officials were allowed to get away with freelancing with large sums of members’ money. And on most occasions executive council members were asleep at the wheel instead of doing their jobs and asking the right questions. Ultimately that meant that the oversight that ought to have existed at the most senior levels of the union was completely absent. As a result, hundreds of thousands of pounds of members’ money was spent on controversial transactions which the leadership then tried to insulate from scrutiny.
In particular, the union’s finance and administration committee (FAC) must be reined in. Comprised of a small group of senior officials, it has come to perform the role of a shadow executive council – only without anything like the same level of accountability. Its activities too often take place below the radar and free from proper scrutiny by the union’s membership. ‘The FAC behaves as if it has decision-making powers,’ said Kidd in his report. He went on to say that the previous general secretary Matt Wrack had told him that decisions of the FAC were rarely challenged at the executive council. That simply is not good enough. The FAC’s influence must be trimmed, and its activities and decisions made more transparent.
The entire ‘hush money’ saga is a legacy of the Matt Wrack leadership – and it is to be hoped that the new regime under Steve Wright will grasp the seriousness of the issue and act to ensure nothing like it happens again.
The union’s new leadership must take the certification officer’s criticisms on the chin and assure members that lessons have been learned and the report’s recommendations will be implemented in full. Otherwise members may question whether the pledge to deliver change and transparency was a genuine one.
The response of the leadership to the report will therefore be instructive. We await it with interest.
The inspector’s full report can be read here.