23 July 2003

A request:  If you are an "E-mail Buddy", please print this newsletter and give it to your buddy.

The public situation with respect to the complaints and the Ombudsman is largely unchanged.   We can make no prediction about when there will be a determination. 

There are some changes in the Office of the Pensions Ombudsman, triggered by Tony King leaving.  Tony King is the person who wrote that the Marks' complaint "is, it appears, essentially the same as [the Mitchell complaint]".  (You can judge that for yourself from our Complaints page).  He also wrote, in explaining why our complaints have been fragmented and some investigations postponed, that "Essentially, the reason that we are reluctant [to do what OPAS recommended] is that doing so makes investigations extremely unwieldy".  (Perhaps he is not a disciple of Tony Blair, who once told the Commons "fundamental rights to justice cannot be driven by administrative convenience")

The Office is being re-organised with a flatter management structure, aiming to clear a backlog of over 300 cases that are more than a year old.  Since complaints to OPAS have risen 50% in the last year, clearing the backlog will probably have to compete with an increased rate of new complaints.

Documents added to the website since the last newsletter are:

"Action on Occupational Pensions"  An account of the government's reaction to the recent consultations on pensions.  As you would expect, the plans are a mixture of what we welcome (such as making it less financially attractive for companies to underfund their schemes) and what we don't (such as no improvement to the Ombudsman mechanism, and the subversion of the Member Trustee mechanism).  These government plans will become law over a period to 2005, hopefully with improvements.  Other comments on the government's plans can be found in this radio program transcript.

Nothing in the government paper directly addresses why the Ombudsman has so far been ineffective in dealing with IBM UK's behaviour, but some "reading between the lines" may be justified, as the account explains.

The government plans legislation to deter ageism, analogous to the legislation we already have to deter racism and sexism.  Ageism is the denial of opportunities by reason of a person's birthdate, as opposed to considering their capabilities.  The legislation may do away with mandatory retirement ages.  There is a  consultation document.

A fifth Letter to MPs.  AMIPP sends letters to some MPs, from time to time, updating them about the IBM affair and how it sits in the context of the wider pensions agenda. 

Other news:

IBM US accounting is the subject of a formal investigation by the Securities and Exchange Commission. All that is public is that the topic is revenue recognition and the SEC is seeking information "primarily concerning certain types of customer transactions". (The UK equivalent of the SEC, the Financial Services Authority does not have such strong powers as the SEC but it does want them:  "FSA wants to show its teeth".)

An IBM UK tax issue from a decade ago has received recent  media attention because the House of Commons Public Accounts Committee is examining the Inland Revenue's fight against tax fraud.  See also  messages around 24 June and 16 July.

For the 10th year, Computerworld conducted a survey to identify the "100 Best Places to Work for IT professionals".  This is one of the better surveys in that it polls employees as well as assessing characteristics of the company.  Top place went to the IT group of the Hershey Food Corporation, a US company that sells into 90 countries.  IBM does not appear in the list.

Microsoft has decided to abandon share options as a means of rewarding workers.  (Observer, 11/7/03).  Options have been described as "a powerful incentive for executives to manipulate earnings or engage in accounting fraud".  Previous newsletters have noted IBM's use of "vapour profits" and its costly exercise of share "buy-backs". 

We reported in newsletter 16 that Microsoft topped the Sunday Times list of places to work. It was inevitable that IBM would eventually lose the position of leadership that it once had in matters of respecting employees, governance, and corporate social responsibility.  It is galling to some of us that it should be Microsoft taking up that leading position, and that IBM is now trailing at the back of the field.

Those of our elected trustees who took the Pensions Management Institute examination passed, and now have the "Trustee Certificate of Essential Pensions Knowledge".

Two polling snippets:  Mori's annual poll showed 3 people out of 4 are "sceptical about firms' intentions to honour their pension commitments".  (according to the Observer, 6/7/2003).  This may be a small consolation to IBM UK and our trustees - where they are held in low esteem it may be due largely to a general mistrust, rather than to their extraordinary behaviour.   On the other hand, a YouGov poll suggested "employee confidence in occupational pensions remained high with three out of four scheme members trusting their employer not to let them down at retirement".  This shows how sensitive polls can be to the phrasing of the questions and the interpretation of the results.

Those of you who are employees who use a company email address to communicate with non-employees may be interested in a couple of recent legal rulings about emails:

The Information Commissioner has ruled that companies who monitor their employees' communications behaviour should not only tell employees that they are doing so, but also tell them why.  So if you have not been told that your communications are monitored in order to assess your loyalty to the firm then it probably isn't happening - your career is safe in this respect.

A US ruling says that sending emails to a company is not "trespassing" on their system.  This reverses a previous decision that somebody who was sending emails critical of a company to the company's employees could be stopped on the grounds of trespass.

There have been two further over-rulings of the Ombudsman by the Courts, which illustrate the difficulties the Ombudsman has in being effective.  In one case [L B Barking v Watts], the trustees took a wrong view of the law.  The Ombudsman supported the member who complained, but his determination was appealed against and the Courts decided the trustees could not be guilty of maladministration because the process they used (in forming the wrong view) was good.  So the complainant is left feeling disadvantaged but with nowhere to go for redress.

In the other case, it took more than ten years to wind-up the AFTS scheme.  Even after the costs of that there was a surplus.  The wind-up costs were taken out of what the members got, not out of what the employer got.  The Ombudsman said that was wrong:   "The employer has an obligation to pay the costs of the Scheme.  By refunding part of the surplus to the employer without recovering those costs, AFTS were, in effect, expecting the members to meet part of the employer's obligation.  This cannot be said to be acting in the best interests of the members".  The High Court did not agree and reversed the finding of maladministration.  The full Ombudsman determination is here.

As our website has been pointing out for some time, instances like this give the Ombudsman an incentive to produce determinations that reflect what he thinks will avoid appeals, rather than determinations that reflect what he thinks Parliament intended him to do.   One can see how this tension might apply to the IBM complaints.