Having decided that the Agents' own account activities had been carried out in an unacceptable manner, both enquiries placed part of the blame on the failure of internal and external control mechanisms. It was claimed that within the Agency neither the CA Board nor the Senior Crown Agent effectively monitored the activities of the Finance Directorate, and that outside the Office, the Ministry, the Treasury, the Bank of England and the Exchequer & Audit Office all adopted a policy of laissez faire. The Agency's supposedly high-risk pursuits were therefore neither restricted nor brought to a halt. As a result, when secondary banks and later property companies began to fail from December 1973, the Agents' own collapse was inevitable. The chapter examines the extent to which the CAs' activities went unsupervised, and investigates their ‘orgy of lending’ during the secondary banking crisis, which both enquiries believed contributed to the Agency's insolvency in December 1974.

Control mechanisms

Agency-wide control

The two enquiries argued that control of the Finance Directorate's activities by the CA Board and Sir Claude Hayes was weak because the Challis failed to inform them of its actions. The Crown Agent Board was established in 1965, in anticipation of the expected incorporation of the Agency, and comprised Hayes and Morris and the heads of all the Office's various departments. It met monthly and was an advisory body only.