From: Moore, Paul (Executive)
[/o=Halifax/ou=HeadOffice/cn=Recipients/cn=352194] on behalf of Moore, Paul
(Executive - Group Regulatory Risk)
Sent: 01 February 2005 16:27
To: 'Bates, Adam'
Cc: C. P. Howard (E-mail); Peter Hamilton (E-mail)
Subject: Various
Importance: High
Adam,
Sorry for not having got back to you. I have been away relaxing for a few days.
In response to your points:1. Keeper's Cottage, Hambledon Lane, York YO61 4BH...but why not send it by email with a
password?
2. I did not actually mean that you personally would confirm consent but that you would confirm
it through Harry Baines and Tony Hobson. In any event, I will ask for the confirmation myself from
Tony and Harry. Thank you for confirming that you agree with our interpretation of the ERA set out in
the rest of the paragraph.
On my second bullet point i.e. the nature of the terms of reference of the investigation, it seems to us
that the investigation needs to consider all the matters set out in the Outline Case prepared by Peter
Hamilton and to determine whether there is sufficient evidence (either set out there or available
through interview or documentary review) to support a case to answer in relation to the allegations of
regulatory irregularity set out therein. In this regard, it is our contention that the burden of proof the
investigation must establish is the same as the burden of proof which the prosecution would require to
establlish in a long form committal proceedings in a criminal indictment - i.e. whether there is sufficient
evidence for a tribunal of fact, properly directed, to find the defendant(s) guilty of the relevant offences
/ breaches. In our view, we do not think it is the remit of the investigation to draw up a detailed charge
list and to determine the charges once and for all, as if it were the FSA tribunal itself but solely to
establish whether there is sufficient evidence to warrant the instigation of further steps in the FSA's
own enforcement procedures. Clearly, if the investigation team does establish what it considers to be
conclusive evidence of regulatory wrong-doing, it should, of course, say so. In any event, if the
investigation team establishes either prima facie [or, for that matter, conclusive] evidence of wrongdoing, it should make recommendations to HBOS to take appropriate action e.g. appropriate
governance procedures for the removal of CF10s and reporting lines to Audit Committee / Chairman.
For example, the investigation could consider covering the following questions set out below - and
please note that no significant consideration has gone into these possibilities and, it is therefore, for
the investigation team to determine whether the facts and allegations in the Outline Case support
substantive allegations of regulatory breach:-
1.
2.
Whether the evidence supports a case to answer that James Crosby, in contravention of The
Principles for Approved Persons - Statement of Principle 5, by appointing Jo Dawson to the
role of Group Risk Director failed to take reasonable steps to ensure that that the business for
which he is responsible was organised in such a way that it could be controlled effectively. In
particular see APER 4.5.8. and 4.5.9(1) and (2) and 4.5.14.
Whether the evidence supports a case to answer that James Crosby, in contravention of The
Principles for Approved Persons - Statement of Principle 6, failed to act with with due skill
care and diligence in making his decision to make my role redundant and appoint Jo Dawson
to take over key aspects of that role. Key matters to take into account in determining this
question include the following:-
o
3.
4.
5.
6.
7.
Did he act in breach of his powers under the Board Control Manual and Group HR
Policies?
o Should he have consulted his GMB colleagues, his Board colleagues or the Audit
Committee when determining the redundancy of the organisation's most senior
CF10?
o James Crosby referred to issues of "confidence in you and and your performance" at
his meeting with me on 8th November. In light of the the overwhelmingly positive
views of the performance of GRR, did he act in contravention of APER 4.6.4.(4) and
(5) in accepting comments or explanations from Mike Ellis or others about the
performance of GRR and PM?
o Was James Crosby's appointment of Jo Dawson as Group Risk Director evidence as
set out in APER 4.6.5
o If he was told by Jackie Moore of the alleged threat to HBOS CF10, why did he not
instigate an investigation?
Whether, the evidence supports a case to answer that James Crosby, in contravention of The
Principles for Approved Persons - Statement of Principle 7, by appointing Jo Dawson as
Group Risk Director and requiring her to apply for Approved Persons status CF10 and CF14
failed to take reasonable steps to ensure compliance with the requirements and standards of
the regulatory system - nempe - the Fit and Proper test for Approved Persons see 1.3.1, 2.1
and 2.2 in particular.
Whether there is evidence of breach of Systems and Controls requirements in Chapter 3.2 of
the FSA Handbook see in particular 3A.6.3 and 3A.6.4.
Having regard to all of the above as well as the personal threat by Jo Dawson to Paul Moore
set out in section 36 of the Outline Case (as disclosed to Phil Hodkinson, Jackie Moore,
Steve Kaplan, James Davies, Tony Brian), whether there is evidence that supports a case to
answer that James Crosby and HBOS was in breach of the guidance (and therefore the
general requirements of Chapte 3) under Sysc 4.2.3 in making their senor CF10 redundant
and whether this raises evidence of a case to answer that James Crosby failed to act with
integrity as is the requirement under the Principles for Approved Persons i.e whether the
statement made in section 52 of the Outline Case is supported by the evidence.
Whether there is evidence which supports a case to answer that Mike Ellis was in breach of
his regulatory obligations e.g. Statement of Principles 1, 5 or 6 or requirements under Chapter
3 and, in particular, Sysc 4.2.3
Whether there is evidence that supports a case to answer that Jo Dawson has been in breach
of similar regulatory obligations - in particular failing to act with integrity or in a way that
ensure compliance with the regulatory regime as well as failing to act with due skill care and
diligence.
The above is intended to provide a helpful outline for the investigation team and not a definitive
roadmap.
In relation to the question of who we consider that the investigation team should meet and for what
purpose, set out below are our views:James Davies - CBF Review and Dawson behaviour and appointment. Corroboration of Dawson
personal threat. Sales Culture Review. Views of Mike Ellis and his support for GRR on these matters.
GRR performance etc etc
Tony Brian - Views on JD appointment - in charge of Approved Persons regime management. Views
on GRR performance.
Andy Sheppard, Andy Gordon, - key external consultants / contractors on CBF review and views on
Dawson behaviour.
Mike Gardener - original IID / GRR Lead Relationship Manager for Dawson's area. Corroboration of
threat and JD behaviour.
Richard Mais - EY secondee on Sales Culture Review - views on culture in Retail division etc.
Jack Cullen Jackie Moore - Person to whom I disclosed JD threat on 2nd September in front of Steve Kaplan. Did
she tell James Crosby; if not why not. Process for appointing JD as group Risk Director. Why no job
description, adverts, fair process for selection etc. Her involvement in my redundancy. Why was
Andrew Smith not made redundant as well if this was de-layering.
Phil Hodkinson - Views on GRR performance. Stated he thought the dismissal was unfair - why?
Corroboration of JD threat and behaviour and general top level views on Retail culture etc. Views on
the process leading to the appointment of JD and the redundancy.
Dougie Ferrans - "This is the worst decision Crosby has made in his life" - Letter stating "I
understand why!"
Guy Bainbridge - General witness - specific witness of June Audit Committee - phoned Marcus
Sephton - "I think Paul's got a death wish" - subsequently confirmed to me that my challenges were
legitimate.
PwC - Witnesses to S166 and June Audit Committee.
Peter Hamilton - Barrister who wrote outline case and reviewed all the evidence - expert in FSA
regulation. We strongly recommend a meeting with him.
Steve Kaplan - Personal coach who has been involved from the very start in everything that has
been happening and can corroborate the difficulties which I was facing. Present on 2nd September
when I told Jackie Moore about the JD threat.
Ian Thomson - My senior executive assistant fro much of the year and party to many of the issues.
Irene Grant - My HR manager on whom I used to download for advice.
Andrew Smith - His views on JD appointment - statement to me that he has been made subject to
retention agreement to make him stay.
Audit Committee James Corcoran - strong views on JD
GMB - Their involvement in the governance process. In particular Andy Hornby and his involvement
in giving views on my redundancy and JDs appointment
Chairman of the Board - His view on the overall circumstances leading to the appointment of JD and
my redundancy.
James Crosby - In particular, his motives and rationale for his actions.
Mike Ellis - As above - was it his recommendation that I should be made redundant? Why?
Jo Dawson - Does she admit the threat? What made her believe she could be protected in such
circumstances?
I hope this gives you enough to be going on with. Don't hesitate to follow up, if you need more
explanation. I still owe you my other document and supporting evidence which I will get to you shortly.
Regards
Paul Moore
-----Original Message----From: Bates, Adam [mailto:Adam.D.Bates@KPMG.co.uk]
Sent: 28 January 2005 17:58
To: Moore, Paul (Executive - Group Regulatory Risk)
Cc: Kemp, Nicole; c.p.howard@rjw.co.uk; phamilton@4pumpcourt.com; Reese, Bernadine K;
Williams, Giles
Subject: RE: My address
Paul
Sorry for the delay in responding to your note to me. A couple of points:
1. Please provide your mailing address to me so that we can send the transcript to you.
2. I do not recall saying that I would “confirm the specific consent of HSBC” for the
terms of reference. My recollection is that I suggested that this was a matter between
you and the firm. The contents of the remainder of the rest of the paragraph confirms
my interpretation.
I look forward to receiving the material set out in your two bullet points.
Kind regards
Adam Bates
From: PaulMoore@HBOSplc.com [mailto:PaulMoore@HBOSplc.com]
Sent: 21 January 2005 15:24
To: Bates, Adam
Cc: Kemp, Nicole; c.p.howard@rjw.co.uk; phamilton@4pumpcourt.com
Subject: RE: My address
Adam,
Thanks for this.
As briefly discussed this afternoon, you agree that, in order to encourage full
disclosure to the investigation team, people interviewed will be told expressly before
their interview that they will protected from having evidence provided by them and on
which you base your conclusions / recommendations being directly attributed to them
if to do so would put them and their position at any risk. For example, if a Board
Director was to corroborate allegations thet the CEO had failed to act with integrity or
with due skill care and diligence, that Board Director would be protected.
In addition, I agreed :
That I would annotate the list of individuals which I suggested you may wish
to interview with a few notes to indicate the particular areas in which I
believed they may be able to help the investigation; and

That I would send you my thoughts on the scope of the investigation and
how the facts provide specific evidence of the breach of specific FSA
regulations.
I will do this by updating the paper to which I referred in our interview, a copy of which
plus supporting documentary evidence I agreed to provide to you.In this regard, on
second thoughts, I think it would be easier for me to copy the documents onto a CD
and send it to you for printing at your offices.
You said that you would confirm the specific consent of HBOS, through Tony Hobson
/ Harry Baines, to my advisers and me seeing the specific terms of reference and
report. In this regard, I would draw your and HBOS's specific attention to S43G(2)(c)
and S43(3)(e) of The Emplyment Rights Act which makes it clear that after protected
disclosures have been made internally or to the relavant regulatory authority (in this
case the FSA), further disclosure of the same matters (e.g. to MPs, media etc) will
also be protected if the employer or person to whom the previous disclosures were
made have not take the action they might reasonably expect to have taken as a result
of the disclosures. Without seeing the terms of reference and report, it would be
impossible to arrive at any sensible conclusion on this point and all the case law and
guidance suggests that this information should be given to the person who has made
the protected disclosures. You can confirm our interpretation of this by reading the
legislation and commentary of the same provided by the Charity called "Public
Concern at Work". You can access this on the internet.
Kind regards
Paul
-----Original Message----From: Bates, Adam [mailto:Adam.D.Bates@KPMG.co.uk]
Sent: 21 January 2005 08:27
To: Moore, Paul (Executive - Group Regulatory Risk)
Cc: Kemp, Nicole
Subject: My address
Paul
Thank you for seeing us on Wednesday. As discussed, please see my
mailing address below. My secretary is Nicole Kemp who can arrange any
copying necessary.
Adam
kpmg
Adam Bates
Global Forensic Chairman
KPMG LLP
20 Farringdon Street
London, EC4A 4PP
Tel: +44 207 311 3934
Office: +44 207 311 1000
Mobile: +44 7802 636 306
adam.d.bates@kpmg.co.uk Fax: +44 207 311 3630
KPMG LLP, a UK limited liability partnership
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