The government’s preferred candidate to be the next head of the National Audit Office has been quizzed by MPs over his role as a board member at Oxfam at the time that covered-up allegations of sexual exploitation in Haiti took place.
Gareth Davies is in line to succeed Sir Amyas Morse at the helm of the public finance watchdog from June, subject to the approval of parliament. He has a three decade career in public-sector audit that includes 25 years at the Audit Commission, where he rose to the position of managing director for audit practice, and most recently at international consultancy firm Mazars’ where he is head of UK public services.
But at a Public Accounts Committee pre-appointment hearing this week MPs quizzed Davies on his time as a non-executive at Oxfam from 2005-11.
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Liberal Democrat committee member Layla Moran asked Davies whether he was at Oxfam when the charity “realised there was an issue” in relation to sexual exploitation perpetrated by some of its staff in Haiti and raised an investigation.
Davies said that the issues, which only became public knowledge in the UK last year, were revealed in his “last few weeks” at Oxfam in 2011, when he was scheduled to finish his second and final three-year term as a non-exec.
In February last year government regulator the Charity Commission launched an inquiry into Oxfam amid concerns that it “may not have fully and frankly disclosed material details” over the Haiti allegations at the time they emerged. A particular concern was that it had not been informed in 2011 that the allegations were sexual in nature. Its inquiry is ongoing.
Davies said the allegations as understood in 2011 were “obviously serious” and the charity’s board had supported an immediate investigation.
“The board assured itself that the regulator had been notified of this incident, the details of that – exactly what was reported, and so on – of course, I don’t have to hand and it was a long time ago,” he said.
Asked by Labour committee member Caroline Flint whether he was aware of the nature of the incidents being reported, Davies said “yes, we knew they were serious” and went on to say that staff had been disciplined, and in some cases dismissed, by the time his term as a board member ended.
Davis said the report into the Haiti allegations was received at his last board meeting with Oxfam.
“I left the board at that point feeling ‘well, clearly this is a very serious matter, it’s been a wake-up call for the organisation, but it’s being taken appropriately seriously and the right things are being done’,” he said.
Davies told MPs that details about the case that had emerged over the past year had not been available to Oxfam board members at the time.
“Knowing what I know now, of course there are lots of things that people would have asked differently,” he said.
“At the time, it was a very experienced board and management team. We’d had experience of dealing with difficult incidents, including major frauds including the tsunami response in Indonesia a few years before. We’d established a precedent about being very open and transparent about that. So the same approach was taken in this case.
“I was very surprised to read all the detail that I had last year because that hadn’t been apparent at the time.”
Davies, who is currently honorary treasurer at Save the Children, said he believed the charity sector as a whole had “underestimated the scale of the sexual abuse challenge” it faced when working in developing countries and disaster zones.
“It was completely underestimated and I was part of that along with everyone else who worked in charities at the time,” he said. “That’s changed in a dramatic way now, and there’s much more reporting of serious incidents.”
Elsewhere in Wednesday’s hearing, MPs asked Davies about new areas he believed the NAO should be probing and for his vision of how its work would change in the future.
Davies said there was a “serious risk” of mission creep – although the NAO had demonstrated its capability in taking on additional tasks, the temptation to assign it more work could mean it lost focus on its prime objectives.
However he said the abolition of the Audit Commission by the Conservative-Liberal Democrat coalition government in 2015 had made it harder for central government to get an overarching view of issues faced at local authority level.
“I think something like Northamptonshire County Council is a warning sign,” he said. “The auditor there was reporting, doing their job and reporting that things were not right. And [there was] some pretty clear evidence that improvements were required, but weren’t happening.
“There didn’t seem to be a swift enough response to that evidence. And I think we are missing that ability to bring it together.
“I don’t think that is necessarily a function for the NAO but it is something for government to reflect on. At the moment it isn’t clear how that loop is being closed effectively and I think it should be.”
Offering a vision for the longer-term future of public finance scrutiny, Davies said it would soon be possible to audit 100% of an organisation’s transactions, rather than a sample, while legal documents could be readale by “artificially intelligent machines” capable of extracting key words and highlighting risk areas in need of more detailed attention.
“All of that has got the potential to transform the efficiency of the audit process and its effectiveness if it’s done well,” he said.
“I’ve seen the beginnings of that in my firm, but there’s a long way to go. I’m not pretending any of that is ready to implement next week. But it’s going to be very important in the development of the NAO’s auditing over the next few years."