Tribunal case hears accusations of Co-operative Group cover-up

The Co-operative Group stands accused of a cover-up at the highest level as its former chief purchasing officer attempts to sue the organisation for £5m. Kath Harmeston claims she was...

The Co-operative Group stands accused of a cover-up at the highest level as its former chief purchasing officer attempts to sue the organisation for £5m. Kath Harmeston claims she was unfairly dismissed because she exposed an alleged procurement non-compliance among the Group’s executive, including chief executive Richard Pennycook and chief operating officer (COO) Pippa Wicks.

The Group said Ms Harmeston was not the victim of a cover-up, but was dismissed because the executive had lost trust in her. It claims she brought in a contractor she knew had been investigated for malpractice at the Royal Mail, without going through proper procurement practices, and says her allegations are “an attempt to mask her own serious misconduct”.

Kath Harmeston
Kath Harmeston

At an employment tribunal in Manchester, Ms Harmeston claimed she was forced out after disclosing senior figures were acting in breach of the Group’s own purchasing policy. She said Mr Pennycook had directly recruited former chief financial officer of Morrisons, Tony Lawrence, with whom he had worked closely during his time as Morrisons’ finance director, in breach of procurement processes. “Richard had directly agreed his terms and was signing off his invoices via his personal assistant,” Ms Harmeston said in her witness statement.

Pippa Wicks, who as well as being Group COO was a supplier in her capacity as an associate of consultancy firm AlixPartners, was “by her behaviours and actions, in my opinion, intent on growing her account strategy with AlixPartners,” Ms Harmeston said.

“I would have expected Pippa Wicks to ensure, as a supplier, that the AlixPartners agreement was compliant with the procurement policy and that she would understand that she was conflicted as both a supplier and an interim COO as she had been given delegated spend sign off authority for all supplier spends.”

Both Mr Pennycook and Ms Wicks circumvented the procurement department when one of Ms Wicks’ AlixPartners associates, Glen Fietta, was hired on “inflated and non-standard terms” in June 2014. Zara Law was engaged by Richard Pennycook “non-compliantly” in October 2013, and her invoices were being signed off by his personal assistant.

Ms Harmeston described “a parlous lack of internal procurement controls, ineffective management discipline, poor oversight and a seemingly endemic non-compliance around procurement practices, which was led from the top”.

“I was astounded by the extent of the non-compliant behaviour,” she said. “Overall, 70% of the goal spend within our remit was non-compliant to the published procurement policy. I’ve never experienced this level of non-compliance other than in start up organisations.”

The Group argued Ms Harmeston was dismissed because the executive had lost faith in her after she employed contractors Silver Lining Partners (SLP). Andrew Burns QC, representing the Co-operative Group, said Ms Harmeston had known SLP had lost its contract with the Royal Mail Group – her previous employer – following allegations of malpractice by a whistleblower, but had failed to disclose this to the Group.

It suggested Ms Harmeston had personal connections with SLP through its founding director Gerard Soames, who she admitted had advised her about her new job.

She said under cross examination that SLP was formed specifically to serve the Royal Mail and had no other clients, and that after its activities were investigated by Royal Mail auditors and forensic accountants Kroll, its contract was not renewed.

She rejected accusations that Gerard Soames was profiteering, and said it was coincidental that she had resigned from Royal Mail while SLP were being investigated. She claimed she had not seen Kroll’s investigation into SLP, even though she had commissioned it. SLP had no case to answer. The investigations were prompted by gossip and a letter from an anonymous whistleblower, she said.

Ms Harmeston claims her direct approach, rigour and appetite for change challenged the status quo and the personal agenda of of the Group’s executive. They were looking for an excuse to sack her because they felt challenged by her, she said.

“My dismissal and the manner in which it was conducted could lead one to believe that I had committed some very serious acts,” she said. “The respondent [the Group] embarked on a deliberate campaign to comprehensively disparage my reputation with staff, suppliers and within the executive search community, seeking to neutralise the impact of my disclosures and to utterly destroy my hard-won reputation and career.”

The case continues.

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