Dear Charlie, it's disquieting that the board hasn't confronted the problems

Severin Carrell
Friday 10 November 2000 01:00

In February 2000, Chris Smith wrote as chairman of the Millennium Commission to warn Lord Falconer he needed to take urgent steps to tighten up management at the Dome.

In February 2000, Chris Smith wrote as chairman of the Millennium Commission to warn Lord Falconer he needed to take urgent steps to tighten up management at the Dome.

Dear Charlie, Clearly, the company has faced ... difficult challenges ... but the NMEC Board does not appear to have played the role we would have expected in confronting the problems and providing leadership.

This is disquieting on issues relating to commercial and operational strategy and media handling, and extremely serious when it comes to solvency and financial management ...

In our view the board may not pick up the reins in this way so long as an executive committee exists on the current model. Yours ever, Chris.

Lord Falconer replied in late March, and promised that he and Bob Ayling, the NMEC board chairman, would quickly tackle these problems.

Dear Chris, We share the determination to ensure that NMEC is as best-positioned as possible to see through this crucial operating year ...

We agree that it would not be sensible to ask any of the current NMEC board members to stand down at this point in time. Stability amongst the non-executive directors is particularly important when there are changes at executive director level ...

The change in Bob's own position means [he] will be able to spend more time on NMEC business for the remainder of the project, though we both agree that it would be a mistake for him to interfere too much with the day-to-day executive management. Yours ever, Charlie

A week later, Bob Ayling writes to Mr Smith, but refuses to accept there is any problem with the NMEC board. He claims the board has spent 275 hours over three years in meetings working on the Dome.

Dear Chris, The professionalism of the non-executives in the performance of their duties and responsibilities throughout this series of meetings has been consistently high ...

In addition, the complex nature of the project (political as well as the logistics and scale of it), the time and budget pressures, and the challenging targets we faced have led to Board members taking a more executive role ... ...(sometimes on a day-to-day basis) than is the norm in listed companies and NDPB's [non-departmental public bodies] to support and help an extremely committed, professional and effective but stretched executive ...

The Board acts as a whole providing leadership and strategic direction for the excellent management team now in place and [it] will ensure that new strategies and policies proposed by the team are tested in discussion. Robert Ayling

In September, Lord Falconer exchanges letters with Lord Dalkeith, a senior Millennium Commissioner, about the NMEC's fourth emergency grant of £47m and a damning financial audit by PricewaterhouseCoopers (PwC).

Dear Charlie, For a long time now we have raised questions with NMEC on issues across the company's business including, for example, the quality and capacity of its management capacity, the accuracy of forecasting, the need for scenario modelling and contingency planning, exit strategies and so on ... I have to say that we have been frustrated by the company's responses, many of which we have perceived as reflecting unchecked resistance by the executive. Yours ever, Richard

Dear Richard, Like you, I was shocked by what the PwC report implied about NMEC's financial management and corporate governance ... I have asked David James [the new NMEC chairman] to report to me when he has had time to consider how best he might strengthen NMEC's corporate governance ... whilst maintaining ... a sense of responsibility for the past performance of NMEC. Yours, Charlie

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