Nigella, Saatchi and business credit cards – a failure of process?

The recent high profile court case featuring two sisters who worked as assistants to Charles Saatchi and his wife, ‘top celebrity TV chef’ Nigella Lawson, had it all from a UK media point of view. The assistants were accused of stealing from the Saatchis through unapproved use of corporate credit cards, but Nigella’s alleged (and partly admitted) drug taking came into it, as did the matrimonial break up between her and Saatchi. Her children and even her dead first husband, John Diamond, got drawn into the discussion.

Yet for the true procurement geek, the main interest wasn’t in the sex, drugs, violence, celebrity or tragedy. It was in the governance process for use of what was ultimately a Corporate Purchasing Card. The sisters held cards that were charged directly to Lawson's  and Saatchi’s businesses. And apparently the spending on personal items had been going on for years before they were challenged on it by Saatchi and his Finance Director.

But what I wanted to know was how could a decent sized business have such lousy approval processes for card spend? Why wasn’t the ‘line manger’ of these assistants checking and signing off spending through the cards? Why didn’t the CFO or one of his team carry out the occasional check or audit? Was VAT being reclaimed if the items were for legitimate business reasons? The BBC reported:

Ms Wasserman told the court she had three bank cards she could use: one credit card linked to Mr Saatchi's business, one linked to Ms Lawson's business, and a debit card which took money from Ms Lawson's account.

So clearly, based on the evidence presented, there was personal spending going through the cards, for the assistants or for the Saatchis and family. If any of that went through either of the two business cards, surely there are questions of tax liability, because that would mean the assistants or the family were receiving ‘benefits in kind’. They and the firm(s) would then be liable for national insurance and / or income tax on the payments, I believe.

And certainly the spend via the card that was linked to Saatchi’s business should have been authorised and checked by his business finance function. If it was a business card, then it is not good enough for the CFO to say this:

Charles Saatchi's accountant has told a court he did not scrutinise bills for credit cards used by Nigella Lawson's assistants because it was "not my job". Rahul Gajjar, finance director for Ms Lawson's ex-husband, said his team were "there to look after business" and not to check home-spending.

If money was being charged against the business, surely it was his job?

Now, I’ve always been a fan of Purchasing Cards, used in the right way. The beauty of them is you do get a proper audit trail of what was purchased – if the assistants had used cash, on-one would know where the money had gone, and if they had just got invoices from suppliers, again it might have been a lot harder to track spend.

But there are certain basic processes and controls that are needed with cards. Certainly for the sisters’ business card, the firm did not seem to be following them – a bit of an indictment for a business of that size, even if it is privately owned.

Voices (2)

  1. Gerard Chick:

    Peter this is a great post and the procurement aspect is (as ever) very smart.

    One would assume that an audit trail would be available and disclosed as part of the process. A smart barrister would either use the existence of these documents to convict the accused or conversely secure their acquittal. Moreover as you so eloquently point out, Rahul Gajjar’s, assertion that his team were “there to look after business” and not to check home-spending appears to be if nothing else an abrogation of responsibility.

    As this case unraveled it reminded me of a court room drama in which a smug and powerful man from an organisation bound by a code of honor and with strict procedures, so confident in his absolute power pronounced that the advocate questioning him about codes, procedures and records couldn’t “handle the truth”.

    Hummm I thought when I read your post – interesting.

    But maybe its more low-brow than that; maybe something from the Cocker oeuvre….. “I wanna live like common people” or maybe “sorted for e’s and wizz” Who knows?

  2. Ben Glynn:

    Loving your Procurement “spin” on this story Peter!

    It has been a bit of a nightmare for “poor” (well not very poor!) Nigella..

    The main thing I have taken from all this is yet another example that extreme wealth does not buy anyone happiness! In fact, it is often the opposite!

    Happy NY and hope that 2014 is a good one!!

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