How Britain could have invented the iPhone: And how the Quangocracy cocked it up

Inventor screwed - while taxpayers sent a clown on holiday

Probing Nesta

During its initial, limited foray, PwC didn’t investigate the conflict of interest relating to Fentem’s assigned mentor's liaison with Novation – nor did it examine whether the mentor should have informed Nesta and Fentem that Novation was in severe financial difficulties. PwC said in its first report that it was not within its scope to judge whether Nesta had been correct to freeze the multitouch project’s funding.

But in a later expanded PwC investigation, it found that despite "a potential conflict of loyalties" which occurred when it transpired that Fentem's mentor had been separately acting as Novation's advisor as well as working on behalf of the inventor, "there [was] no evidence this caused any detriment to the complainant's project". It also noted that the Project mentor's position with the manufacturer had been "unpaid" and "informal".

It did however, note that the potential conflict of interest should have been registered at the time and added that there was not "sufficient guidance on conflicts ... for Nesta's Project mentors".

Emails obtained via FOI which The Register has seen revealed that when the report was delivered, NESTA executives internally considered asking PwC to amend its report in relation to the final point about the "potential conflict of interest".

It is worth noting here that Nesta did not do this.

Nesta did not contest the finding.

“I am very sorry that in your case, we fell short of the high standards you should expect from NESTA,” wrote CEO Janet Morrison in March 2005, after the PWC probe partly upheld Fentem's complaint.

Morrison confirmed that for Fentem to receive the remaining £80,000 to continue his work, he would have to agree that Nesta take control of his efforts again – trusting the same organisation that, from the inventor's point of view, had delayed the project for nearly two years. Nesta maintained that Fentem needed to find a new development partner before the funds could be released.

The initial internal review by Nesta had partly upheld Fentem's complaints that the "10 months it took [Nesta] to process [his] full application exceeded Nesta's published service standards which state that applications will be processed in 10 to 14 weeks". Later, the PwC review added that a decision not to pursue collaboration with Novation could have been taken in March rather than June and may have resulted to avoid a consequent three-month delay to the project.

Writing letters

So Fentem began to pursue the new Labour establishment – and found help in the form of his constituency MP, Emily Thornberry (Lab., Islington South and Finsbury), now the Shadow Attorney General. As they pressed to find someone to take responsibility, they struggled to get the actual government to exercise any oversight over its quangocracy.

Bodies which should have investigated the scandal failed to do so: the Ministry of Fun (aka the Department for Culture Media and Sport), the National Audit Office, and the Parliamentary Ombudsman. Perhaps most surprisingly, Thornberry repeatedly attempted to engage the Parliamentary and Health Ombudsman - Dame Ann Abraham. The Ombudsman sounded ideal: the position had been created to investigate malpractice in public bodies on behalf of citizens.

Yet Fentem claims that each request to investigate Nesta was turned down by Abraham. Her office cited a clause in the 1967 Parliamentary Commissioner Act which allowed it to “exercise its discretion” not to investigate contracts. The parts of the complaint which did fall under its remit, it declared, were so “entwined” with the contracts that its hands were tied.

Any outcome of an investigation into these matters would not achieve any meaningful result in view of the fact that there are statutory restrictions on our ability to address the key issue of alleged actual financial loss. The most we could achieve for Mr Fentem if an investigation were to find maladministration, is a review of the complaints and conflict of internal procedures at NESTA, review of the processes used to select development partners, and an apology.

A former council official, ombudsman Abraham had launched a project called "Ombudsman's Principles" which took two years to define what an Ombudsman should do. Proudly enshrined in the 2007 publication "Principles of Good Administration", these included "Getting it right", "Being customer focused", "Being open and accountable", "Acting fairly and proportionately", "Putting things right" and "Seeking continuous improvement".

Later dubbed “the Quango Queen”, Abraham retired with a £1.45m pension pot in December 2011, claiming £9,100 on hotel expenses in her final nine months in the job. Her career had included spells at the quangos Housing Corporation, the Benefits Agency and the National Association Of Citizens Advice Bureaux and the Committee On Standards In Public Life. She also acted as the Health Service Ombudsman for a full nine years, until just two years ago, in 2011.

Abraham's office argued that any compensation in Fentem's case would be “consolatory” rather than full compensation of the commercial opportunity lost. Reluctantly, Fentem and Thornberry agreed to forego fair compensation. While Fentem had lost an incalculable amount, perhaps future inventors would receive better treatment. They urged Abraham to open an investigation, merely to hold the quango to account.

In June, Abraham again refused: “I need some evidence of maladministration," she wrote.

The Breakfast Club

By 2006, Nesta had become too embarrassing even for the DCMS. The old I&I department was effectively disbanded. But soon it was back.

“This has been a year of good progress for NESTA,” wrote Chairman Chris Powell in the foreword to the 2007 Annual Report (PDF).

Powell trumpeted a new “Intellectual Property Accelerator that helps creative entrepreneurs make the most of their intellectual property.”

The report goes on to detail that NESTA had developed “a new strategic direction” entailing a “realignment of programme streams”. But what was in the water, and where would the streams flow?

The quango also moved to BIS, the biznovation department, from DCMS in 2007. It had become a talking shop; the new Policy and Research Unit would become “a hub for the policy and research community around innovation”. Still, Powell seemed pleased by the changes:

In November 2006 we moved to our new offices in Plough Place in London - a truly inspiring space, which is already recognised as a physical hub for individuals and organisations to meet, swap ideas and network.

But the relentless technology market didn’t cease. Remember that Fentem had urged NESTA to approach Apple in March 2004. In early 2005, Apple instead acquired Fingerworks, a company founded by an electrical engineering student – just like Andrew Fentem – called Wayne Westerman. Westerman’s PhD dissertation was titled “Hand Tracking Finger Identification and Chordic Manipulation on a Multi Touch Surface” and he’d managed to produce commercial products within three years.

Spanning as it did science and the arts, Fentem’s work was arguably much more flexible and sophisticated than Westerman’s keyboards and much more closely aligned with Apple’s vision.

Today, the iPad is capable of manipulating images and driving virtual instruments – and this was all work Fentem was perfecting in 1999, work that had to be “relearned” by Apple after acquiring Fingerworks. Acquiring Fentem's potentially superior British technology could have allowed Apple to bring products to market faster.

But thanks to the bungling British quangocracy, Apple never even saw his work.

In fact, in a bizarre twist, Nesta actually contacted Fentem asking for royalties statements, gross receipts and updates on his trading status the following year in a letter seen by The Register.

In its first five years handling a £250m endowment, NESTA saw a return of just £228 in royalties ("Puttnam fund hit by row on ‘follies waste’" - Sunday Times - behind paywall).

“A few years ago,” Fentem recalls, “I was interviewed about my work by the British Council - the article was for a magazine distributed by their 'creative embassies' around the world. After the usual questions about my influences etc, they asked me what my message would be to young people thinking about coming to work or study in the UK.”

“I said, 'Don't'. 'Don't what?' asked the woman from the British Council...'Don't come. Don't come to the UK....that would be my message'."