Kath Harmeston accused of distraction tactics to gain pay off

The officer who investigated Kath Harmeston’s attempts to blow the whistle at the Co-operative Group has dismissed her claims as “distraction and delay” in an employment tribunal. Simon Mills, HR partner at the Group, said former procurement director Ms Harmeston, who wants £5m damages for unfair dismissal, was attempting to position herself for a large pay off.

Ms Harmeston says she allegedly exposed procurement non-compliance across the Group, including among its executives. She is claiming whistleblower status, saying she handed “protected disclosures” to Mr Mills and Andrew Pope, the Group’s head of risk partnering, on 25 June 2014. The Group said her disclosures are not protected and she is not a whistleblower.

“Kath was using this document as a way to fight her suspension, rather than as a genuine complaint about alleged wrongdoing,” Mr Mills said in his witness statement. “She only raised the matters and called them protected disclosures after she was suspended.

“I did not believe she was genuine. She was trying to distract us from the investigations that were already underway, and complicate the process.”

He said she named as many of the Group’s senior employees as possible to make it difficult and costly to investigate. He added that chief executive Richard Pennycook would not settle out of court and wanted her dismissed or reinstated.

In her disclosures Ms Harmeston alleged Mr Pennycook had shown poor judgement in non-compliantly hiring his former Morrisons colleague Tony Lawrence, who she said was failing to deliver on a procurement project called PPG.

She was also concerned by Mr Pennycook’s non-compliant payment of consultants to assist Lord Myners in his governance review, and by conflicts of interest among key employees, in particular interim chief operating officer Pippa Wicks, who was paid £8,000 a day but was also a supplier as an associate of Alix Partners.

She drew attention to non-compliant consultancy spend, including on Ms Wicks and her colleague at Alix Partners, Glen Fietta. The disclosures also detailed the indiscrete disclosure of confidential matters regarding Ms Harmeston and other employees, and misconduct against Ms Harmeston.

Mr Mills said his investigation showed there was no substance to the disclosures. He said the organisation was in crisis at the time and “while some of the matters Kath has identified were arguably not best practice, they could not be said to be unlawful.”

He admitted Mr Pennycook had acted outside the Group’s procurement process, but added that the chief executive had authority to do so. In a letter to Ms Harmeston he said: “In each case you refer to there was a genuine, urgent, and unavoidable need to bring in additional support to the management of crises within the group.”

Group head of procurement, Lucy Halligan, admitted there was room for improvement in procurement compliance across the Group, including at executive level. Ms Harmeston claimed Ms Halligan had identified Mr Pennycook as “one of the worst offenders”. Ms Halligan denied this.

She said the executive had the authority to engage consultants directly and this was “a necessarily common practice throughout 2013 and 2014, a crisis period”. But, she added, the Group needed to address engagement issues with the executive and she believed Ms Harmeston was the person to do this.

“The procurement team was capable of achieving much more,” she said. “That’s why I welcomed a more senior person to achieve that step change.”

Consultancy spend at the Group peaked at £39m in 2013; what Ms Halligan described as “an unusual year”. It hit £13.9m in the first quarter of 2014 before decreasing. Ms Halligan said the Group could make significant savings on consultants by involving the procurement team and increasing competition, but she said figures for potential cuts put forward by Ms Harmeston were “speculative”.

The case continues.

More on the story:

• Former director misled Co-op Group over contractors, tribunal hears
• Kath Harmeston: Group could have been ‘world-class’ within a year
• Consultancy spend at Co-operative Group ‘feral’, tribunal hears
• Tribunal case hears accusations of Co-operative Group cover up
• Former procurement chief takes Co-op Group to tribunal for £5m damages