An independent review has called for a major overhaul of governance at the Royal Institution of Chartered Surveyors after finding that four non-executives were “wrongly dismissed” when they raised concerns.

In her 467-page review, published today, Alison Levitt QC investigates allegations that Rics “tried to suppress a critical internal report into its finances and then unfairly dealt with those who had sought to explore the issue”.

She reports that in 2018, the organisation had to temporarily extend its overdraft from £4m to £7m as a result of “inaccurate cashflow forecasting”.

An audit by accountancy firm BDO, raising serious concerns about treasury management controls, was received by the chief operating officer in December 2018, but not shared with the rest of the board until seven months later. 

However, when the four non-executives raised concerns that the audit had been suppressed, they were sacked from their roles.

Levitt entirely exonerates the four non-executives Simon Hardwick, Bruce McAra, Steve Williams and Amarjit Atkar.

She says they would have failed in their duties to Rics if they had backed down.

Rics’ governing council was unaware of the BDO report until it learned of the non-executives’ dismissal in November 2019 and was not shown it until January 2021.

Levitt says the problems stemmed from a “power struggle” between the executive and non-executive members of Rics’ management board.

When non-executive members of the management board insisted that they should have sight of audit reports it became a “them or us” situation, she found.

She says that a lack of clarity over governance structures and the responsibilities of senior staff “left cracks within which the chief executive and his chief operating officer had become used to operating with little effective scrutiny”.

She says that although they believed they were acting in the best interests of Rics, they were resistant to being challenged. 

She also concludes that Rics was not well served by its lawyers who should have given objective advice but saw their role as being to protect the executive.

Levitt’s main recommendation is for a wide-ranging external review of purpose, governance and strategy, led by an independent person, such as a retired senior civil servant.

Without such a thorough review, Levitt warns there is a real danger of history repeating itself.

Rics governing council has committed to implementing all the report’s recommendations and has issued a formal apology to the four non-executive directors and offered to reimburse their legal fees. 

It has also apologised to members of the governing council 2019 group who were incorrectly threatened with legal action and also offered to reimburse their legal fees.

Prior to the report’s publication, chief executive Sean Tompkins; president Kath Fontana; interim chair of governing council, Chris Brooke; and chair of the management board, Paul Marcus stood down from their posts. 

Chair of the audit committee Amit Shah has come to the end of his term.

A process is under way to appoint a new interim chief executive and an announcement is expected imminently. 

Nick Maclean, who led the steering group for the independent review, has been appointed temporary chair of governing council, and will be donating his salary for the role to Lionheart, the Rics charity.

In addition to recommending a wide-ranging external review, the report makes a series of interim recommendations to improve governance and accountability.

It calls for bonuses of senior executive staff to be reviewed to determine whether they are appropriate for a professional membership organisation. 

It says that whistleblowing procedures should be overhauled to allow any complaint against a senior member of the senior leadership team to be referred to an independent third party.

The report recommends that the contract for Rics’ legal advice should be put out to tender every three years.

Maclean says: “We are grateful to Alison Levitt QC for her very thorough report and have accepted her findings in their entirety. 

“We commissioned an independent reviewer because we are committed to fostering a culture of openness and transparency and that is why we have published it in full.

“Whilst her report makes uncomfortable reading it provides us with an opportunity to implement far-reaching reforms and establish Rics as the gold standard for professional bodies, which will regenerate our historic institution.

“I have personally apologised to the non-executive board members who were unfairly dismissed on behalf of Rics and would like to repeat this apology publicly, as well as apologising to members of the GC2019 group who were improperly threatened with legal action.

“We have accepted the decisions of the CEO, president, chair of governing council and chair of the management board to stand down and thank them for their service.

“I can promise our members and staff that we will have an open dialogue about our plans for the new, external review of our organisation and about other changes we implement to address the failings identified in the report.

“I can reassure the wider profession and the public that our oversight of professional and regulatory standards has never been compromised by the events described in this report. 

“These functions are governed by a separate board, established at the beginning of 2020, with a lay majority and chaired independently by Dame Janet Paraskeva.”

Alison Levitt QC says: “Rics is an organisation about which its members are passionate. 

“Whilst those who provided evidence to me disagreed about a great many things, there was one subject which united them, namely the sense of pride they felt at being members of Rics.

“This has been a sad and depressing episode in the life of a great Institution. 

“There is a yearning to return Rics to a position of pre-eminence in professional membership organisations. 

“I am confident that with courage and imagination, an independent external governance review will be able to put Rics into the position of moving forward in unity in the public interest.

“My report has not made easy reading for the governing council of Rics, which has shown courage, leadership and a real commitment to transparency by publishing it in full. 

“I am pleased that it is adopting all my recommendations without delay.”

Departing chief executive Sean Tompkins says: “The changes which may flow from the independent governance review will take time to achieve, time I can no longer commit to after 10 years as CEO.

“I believe this requires longer term leadership to support governing council with the critical journey of change and, as a result, I will be standing down as CEO.”