BBC 'Culture of Cronyism' Criticized by Parliamentary Committee

Luke Macgregor/Reuters
BBC director general Tony Hall has capped severance payments.

A report on excessive severance payouts says the BBC is "the world’s leading public sector broadcaster," and the payments "put its reputation at risk."

LONDON – The BBC's global reputation was put at risk by excessive executive severance packages, which were part of "a culture of cronyism," the Public Accounts Committee of the British parliament said in a report published on Monday.

“The BBC is the world’s leading public sector broadcaster, but recent revelations over severance payments to departing senior managers have put its reputation at risk," said member of parliament Margaret Hodge, who chairs the committee. “There was evidently a failure at the highest levels of the BBC to challenge payments to senior managers and what appears to have been a culture of cronyism that allowed for the liberal use of license fee payers’ money."

British households pay an annual broadcast license fee to help fund the public broadcaster.

The report's publication came after a National Audit Office report in July, in which the financial watchdog revealed that 150 senior BBC managers received severance payments totaling $40.8 million (£25 million) that went beyond contractual promises. "We were dismayed to find that many of these individuals received ‘sweeteners’ in their severance packages that were far larger than the sums to which they were contractually entitled," Hodge said Monday.

Two parliamentary hearings about the BBC severance packages and policy followed the National Audit Office report. 

She also criticized former BBC boss Mark Thompson for arguing that "he had to pay his former deputy and long-time colleague Mark Byford a substantial extra sum to keep him ‘fully focused’ on his job instead of ‘taking calls from headhunters’."

And the report said the BBC Trust, which supervises the U.K. public broadcaster, failed to do its job. “While the executive was handing out these inflated severance payments, the BBC Trust was sitting on its hands, failing to fulfill one of its primary duties, which is to ensure the rigorous stewardship of public money," Hodge said. 

She argued that the big payouts were also "a kick in the teeth for the thousands of journalists and creative talents working at the BBC who produce the high-quality programming that sustain its worldwide reputation, and who do not receive generous salaries."

The report said the committee was "pleased" though with new BBC director general Tony Hall's acknowledgement that the broadcaster "lost the plot" on severance payments and his decision to cap such severance packages at $244,800 (£150,000).

The parliamentary committee's made some recommendations, many of which the BBC earlier this month announced as goals under a governance overhaul.

The committee's recommendations include:
* The BBC should ensure that severance payments do not exceed what is absolutely necessary.

* The BBC should remind its staff that they are all individually responsible for protecting public money and challenging wasteful practices.

* The BBC should establish internal procedures that provide clear central oversight and effective scrutiny of severance payments. 

* The BBC executive and the BBC Trust need to overhaul the way they conduct their business and record and communicate decisions properly.

* The BBC Trust should be more willing to challenge practices and decisions where there is a risk that the interests of license fee payers could be compromised. 

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