Why disgraced CEOs rarely fall as far or as fast as everyone else

Paula Vennells sounds as though she has some of the qualities and values of a good sub-postmaster. “You can’t just focus on the commercial side by itself, it’s about community too,” Vennells told the Daily Telegraph in 2013.

By that point, rather than running a small branch office of the UK government-owned Post Office, she was a year into her seven-year tenure as its chief executive after a glass-ceiling-shattering career in retail and marketing.

Last week, she came crashing down. Vennells apologised to sub-postmasters wrongly convicted over financial shortfalls in branch accounts that were in fact caused by faulty computers. She resigned from two board positions and stepped back from her role as a minister in the Church of England, pledging to “focus fully” on the inquiry into what went wrong. The IT system was installed before Vennells’ time. Campaigners, though, accused her of aggressively pursuing prosecutions and welcomed her downfall.

The comparison between her trajectory and that of the hapless sub-postmasters is instructive. Many also rose to be pillars of their communities. After the fraud accusations, they had to give up positions of trust and saw their reputations undermined. Noel Thomas told the BBC that he had been “pretty respectable” in the Welsh village where he was a sub-postmaster and councillor. “I really fell off the ladder,” he said.

Vennells, on the other hand, not only clung on to the ladder; for a while she continued to ascend it. In 2019, the year she left the Post Office, she was awarded a CBE by the Queen, became chair of an NHS hospital trust, and added non-executive roles at Dunelm, the retailer, and the Cabinet Office, to her directorship of Morrisons. Until last week, hers was not so much the tragic path of hubris, crisis and nemesis, as hubris, crisis and benefits.

The Post Office case illuminates the stark asymmetry of disgrace. If business leaders falter, their fall is usually well cushioned, not only by the financial perks of office, but by a safety net of useful contacts — a safety network, if you like.

Tony Hayward, humiliated as BP’s chief executive after the Deepwater Horizon oil spill, re-emerged at the head of his own oil company and became chair of Glencore, the commodities group. Many UK bank bosses during the financial crisis, including, albeit briefly, Fred Goodwin, much-vilified ex-chief of Royal Bank of Scotland, found advisory or private equity jobs to supplement their pensions afterwards. The reinventions of US domestic goddess Martha Stewart, jailed for lying about a suspicious stock sale, and Michael Milken, the junk bond king whom Donald Trump pardoned last year, are the stuff of case studies.

Such routes to redemption ought to be open to all, not just the well-off and well-connected. In interviews last week, former sub-postmaster Thomas echoed many who have endured personal scandal, pointing out “you find out who your friends are”. But even as more of the blame for the sub-postmasters’ plight was laid at Vennells’ door, her safety network allowed her to find roles on company boards. Thomas secured a part-time job, too, at the local garden centre.

In other words, the ex-Post Office boss received one benefit her former employer failed to extend to Thomas and the other postal workers wrongly accused of embezzlement and dishonesty: the benefit of the doubt. Boards assessed Vennells on her potential to be an “insightful, effective and hardworking non-executive director” in the words of Morrisons’ chair after she resigned. The Post Office, on the other hand, judged the sub-postmasters to be wrong, and the computer to be right. It prosecuted them and pursued recovery of the “missing” funds accordingly.

Vennells has finally done the right thing. Whatever the inquiry determines, she will probably never enjoy the clear outcome that the sub-postmasters have finally achieved following their successful appeal against wrongful conviction. As one of a comparatively small group of women in a high-profile business role, she commanded more headlines than male equivalents while climbing to the top. She is likely to receive proportionately greater opprobrium as she tumbles back down. In any case, her path to other public roles is currently blocked. Disgraced leaders “may not starve to death or go to jail but they fall a long way in their social circle”, one executive coach reminded me last week.

The difference is that for chief executives reputational risk and the threat of rough justice are occupational hazards. “Mud sticks,” to quote Thomas. Those at the pinnacle, though, have access to more ways to launder it away. It is only fair if they learn to apply to those at the bottom the benefit of the doubt which comes with the other perks of high office.

andrew.hill@ft.com

Twitter: @andrewtghill