Thank goodness sense has prevailed and the Government has withdrawn its ridiculous attempt to take the non-executives overseeing Carillion to court for alleged failures. Carillion failed ignominiously and it was no-one’s finest hour, so it was right that serious questions were asked about how that could happen, but it is a travesty that non-executives should find themselves in the dock if they have done their jobs properly.

It is now late 2023. The collapse occurred in 2018 and the judgements are only just coming through. This is totally unacceptable. Leave aside the eventual decision to not take the non-executives to trial; just imagine how their and their family’s lives must have been ruined by having to wait for such a period for this decision. Having read the arguments now, I don’t think the Government had a case, which, of course, is why the case folded.

Someone should be accountable for leaving it that long though; I doubt that anyone will be brought to trial for alleged incompetence or negligence, or vindictiveness or any other adjective that could be deployed.

The heading in The Times reporting upon the decision is a perfect example of a failure in society to understand what went on here: “Executives at Carillion avoid trial.” The heading suggests that this is in some way an injustice though the article is more balanced. Let’s look at the arguments:

Carillon was a big multi-billion-pound business that collapsed when it was discovered that the company had “misrepresented the reality of the business.” In other words, it was an alleged sham. The government – through the Insolvency Service – claimed that the non-executives had a “contributory responsibility” for the failure. I understand the argument, but it does not wash with me, even for a second.

I should say that I don’t know, or indeed know of, any of the non-executives in this case.

Had the government pursued this case, I suggest that it would have been as clear as night follows day that there would have been a raft of resignations of non-executives around the country for obvious reasons. No one wants to end up in jail, especially if you have done your job and have been misled by an auditor!

We need to look at what it means to be a non-executive. I suggest that there is a clue in the title – non-executive – and yet, when you look at it, the fiduciary responsibilities remain the same as the executive who might be sitting alongside you and earning squillions; though to be fair, some NED fees on the face of it do appear attractive…

Reading The Times readers’ comments on the article suggest that they mostly feel that this is money for old rope – “turning up and scratching your bum” as one person has thoughtfully put it. Oh dear. I thought more of Times readers. They have clearly gone the way of the woke brigade that want something for nothing and fail to understand risk, return, responsibility and accountability. I am disappointed.

Being a non-executive is for real, but here’s the thing: NEDs can only know what they are told, and what they can find out. Of course, they should use a bit of old fashioned nous. If it smells, something is probably rotten somewhere. The key point is that non-execs can only know a fraction of what the executives know – is that why non-executives only receive a fraction of the executive remuneration? – and they are certainly entitled to rely on their auditors to do a decent job.

Many non-execs I know do not feel rewarded appropriately for the risk they feel they are taking, and this case does nothing to dissuade one of that conclusion. Several will simply not take a listed company position today. That is partly why fees are creeping up and this case will push them up further; Times readers take note. Another example perhaps of government achieving the opposite of what they might have intended.

My greatest disappointment in the whole sorry affair, though, is reserved for the failure of the Financial Reporting Council (FRC) to levy an appropriate penalty on the auditor, KPMG: £30 million reduced to £21.5 million – plus some hefty costs – for being helpful in the investigation! It has been reported there were a “litany of errors” over a long period (2013 to 2017). I ask you, what is the point of an auditor if there is no accountability were it all to go wrong? The fine is a drop in the ocean compared to what was lost and the lives ruined, including the non-execs. Fines should be meaningful. That might help improve standards, but probably not the fees that this profession charges.

I hesitate to say it, having thought the opposite for many years, but I think the American system might be better; everything there is litigated, and fines – if errors found – are huge, and dare I say it, non-execs are properly rewarded in their efforts to look after shareholders. In other words, you know where you stand. With the UK system as it is currently, you don’t. Senior and respected and very good friends of mine refuse to consider serving on a listed board for good reason. That is not a good outcome for society.

So here is my prediction: thoughtful intelligent, respected and experienced people, the ones you really want on your board to represent Mr and Mrs shareholder, will not do this for long if at all, with the risk now embedded in being a NED. It is difficult to find a good non-executive today, and harder still to find a good chairperson. That is about to get harder. Furthermore, expect more UK companies to take their listing to the US where the deal there is at least clear.

And for those that want a well-paid job where they can be king of the hill whilst they do their work and where, should they a make mistake, they will not be held to account as strictly as they might in another profession; become an auditor.