Non-compliance with procurement policy was running at 70% at the Co-op, tribunal told

Will Green is news editor of Supply Management
8 January 2016

Kath Harmeston, former procurement director at the Co-operative Group, has alleged that non-compliance levels with purchasing policies at the organisation were running at 70%.

In a witness statement to an employment tribunal in Manchester, Harmeston said staff “across the business were placing commitments with suppliers without going to the procurement department first to raise orders and contracts as the policy required”.

In a document sent to senior managers on 17 April 2014, just weeks after she joined the organisation on 1 April, Harmeston also claimed that 50 per cent of capital projects, which totalled 625 with a value of around £300m, “did not have adequate financial analysis connected to them”. She said this was taking place at a time when the Co-op was facing debts of around £1.5bn.

However, the Co-op has described Harmeston’s claims as a “smokescreen” to cover up her poor performance and judgement in engaging a firm of consultants who had been the subject of whistleblowing claims, and these are the reasons she was dismissed.

In her statement Harmeston said the Co-op was “haemorrhaging money” on management consultants and that “due to breach of procurement policy the respondent had paid between £4m and £8m more than they needed in 2013 for consulting services”.

Harmeston claimed there was 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”.

Harmeston said after she made the allegations, which she claims are “protected disclosures” under UK whistleblowing law, the attitudes of senior staff “changed in a negative way” and a disciplinary process was initiated against her based on an “anonymous whistleblowing complaint which I contend contained a number of false statements”. She described working in a “highly political and dangerous environment”.

Harmeston was suspended on 16 June 2014, before being dismissed on 12 September. During the disciplinary procedure she claimed she was assigned the code name “Wimbledon” by Co-op staff “so as to avoid creating a paper trail of emails relating to me”.

The tribunal was told two whistleblowing letters were sent regarding a firm of consultants, Silver Lining Partners (SLP), whom Harmeston engaged, firstly at Royal Mail and then at the Co-op.

The first letter, sent to the Royal Mail, claimed the consultants were overcharging the organisation and alleged impropriety in the way the firm was procured.

Under cross examination yesterday Harmeston was asked why only SLP was considered for the project at the Co-op and why she did not mention to the Co-op that SLP had been the subject of allegations at Royal Mail. “That was assessed and there was no case to answer,” she said.

Andrew Burns QC, acting for the Co-op, said: “You wanted to get them in under the radar without revealing their track record.”

Harmeston denied this, responding: “I was working to a very tight time scale.”

Harmeston is seeking £5.2 million damages for unfair dismissal. The hearing continues.

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