May 30 2021

Who said this, about what and when?

“All organizations have bad apples but what an organization ….. also has is well paid and exquisitely educated bosses, part of whose job is to spot these bad apples and, if they are spotted, deal with them.”

It could have been said about any number of organizations over the years.

In fact, it was said last week about the BBC. It was said by Andy Webb, the journalist who uncovered the facts about how Martin Bashir got that interview with Diana and the – even worse – scandal of how this was covered up over the years by the BBC.

There is much that is familiar in this story:

• wrongdoing – in particular, immensely profitable (both financially and reputationally) wrongdoing;
• a “star” who can seemingly do no wrong and is protected by his bosses;
• whistleblowers who are ignored or punished;
• a wholly inadequate initial investigation;
• an eventual critical external report, continuing reputational and other damage and one hell of a mess to clean up.

As always, it is the response to and cover-up of the initial wrongdoing which causes most problems.

But it was what Andy Webb said next which goes to the heart of the issue of all wrongdoing and the culture change necessary to minimise it and its consequences –

“It would have been a huge ask of the Head of a News Division, having recently seen the most famous, the most significant piece of news coverage in the Corporation’s history, having gone round the world, having won prizes and plaudits, how much moral courage do you need to pull the plug on the story …. by saying that it was gained through an egregious ethical breach? Who would have been brave enough to do that? It’s my feeling the bosses were not brave enough to do that and it prompted the cover up.”

This is the acid test. A two-part test, really.

• When a high earner, a star, a prize winner misbehaves, will the bosses have the moral courage to pull the plug?
• And are those lower down the pecking order confident that this is what the bosses will always do?

Moral courage is at the heart of professionalism, at the heart of any successful, worthwhile, sustainable culture. It is its absence which so often allows small problems to become big ones. Building, reinforcing and rewarding the courage necessary to take difficult steps, to be open about what you are doing and why are at the heart of any successful culture change programme.

This time the BBC has been found wanting. But how many other organisations can honestly answer yes to both questions?

Photo by Varvara Grabova on Unsplash

September 30 2020

Earlier this year, Richard “Tigger” Hoare died, sadly one of this year’s many Covid fatalities. His Times obituary can be found here. A highly capable banker of the old school, coming from a long-standing banking family who still own the family bank established in 1672, he was proud to state: “I have never minded challenging things, if there is something that needs to be challenged.”  And he meant it too, as the last paragraph of his obituary makes clear –

“When the regulators interviewed the partners 20 years ago, they asked me what I thought was the greatest threat to the bank, and rather foolishly I said, ‘I think you are.’ They were very cross!”

Well, even regulators, maybe especially them, need to be challenged now and again.

Sir Harry Evans, journalist and editor of the Sunday Times at a time when investigative journalism rather than clickbait articles was valued, who died last week, was another who understood very well the need to challenge those in authority. During his time as editor he won famous victories over those who tried to stop the publication of diaries by Cabinet Ministers (Richard Crossman) explaining what really goes on in government and those seeking to cover up what was known about the thalidomide drug which caused such misery to so many families.

There is a lovely line in his obituary – “Evans combined technical proficiency with moral passion to an unusual degree.”

A combination of technical proficiency, challenge and moral passion: if only we had more people in positions of power and authority of whom this could be said.

Photo by author.

July 30 2020

Last week Parliament’s Intelligence and Security Committee wrote about how Russian oligarchs and their money had been welcomed by the UK from the mid-1990’s onwards, with Britain’s “light touch … regulation” (where have we heard that before?). The UK’s rule of law and judicial system were seen as a particular draw. But, as the report says: “few questions – if any – were asked about the provenance of this considerable wealth.” Oh dear.

The report says that, rather than the encouragement of ethical practices and transparency amongst the Russian investors as hoped, Britain’s institutions provided “ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’”. The patronage and influence this money brought to “willing beneficiaries” helped the reputation laundering process. And then there are the enablers, described with some asperity, as those who “on occasion help launder money through offshore shell companies and fabricate ‘due diligence’ reports”. Dear oh dear.

The authorities do have some ways of countering this: Unexplained Wealth Orders, for instance and seizure of assets. How well these work is another matter, of course. The Court of Appeal recently overturned three UWO’s obtained against the family of the former president of  Kazakhstan, now subject to appeal by the National Crime Agency. The NCA may win its appeal but, as stated in the report, there is an imbalance of resources between the NCA and those with the wealth to fight back. And the longer the money is around and channelled through companies, property, trusts, charities and the rest, the easier it is to disguise its original smell and explain it away – enough to fight off the UWO, anyway.

There have been some successes: in relation to the spending (£11 million on a townhouse, £16 million spent in Harrods over a decade) by the wife of a former chairman (and convicted fraudster) of a state-owned bank in Azerbaijan, for instance. Or the seizure by the City of London police of £2 million in cash held in British banks by a professional money launderer acting for the Calabrian mafia, the ‘Ndrangheta, after a two-year investigation.

Three points are worth noting:

• One of the weakest points of any system is the point of entry. Much easier to keep “dirty” money out than to try and get rid of it once it is in and, over time, made to appear respectable or, at least, explained. Ditto re dodgy individuals.
• Once in, getting rid of the dodgy individuals and money risks becoming a game of Whack-a-Mole, one which tests the patience and resources of the authorities and requires their relentless and sustained focus.
• Be wary of those seeking to use the credit and reputation you have built up over years. That applies to professionals as much as it does to countries. It is flattering to think you will teach and improve them. The grubby reality may be that it is your reputation which is tarnished. It’s an old problem: some well-established banks and professionals learnt this the hard way – with one Robert Maxwell back in the early 1990’s. It’s a lesson worth remembering rather than relearning.

One thing is puzzling though. For years – since at least 1994 – there have been money laundering regulations, with the latest iteration brought in last year. The level of information needed is onerous and extensive. The principle underlying all these rules and regulations and the concept of due diligence is that banks and lawyers and estate agents and the myriad of intermediaries should really know and understand their customers and where their money comes from. So how is it that, even now, a couple of Calabrian Mafiosi are able to set up a company that does nothing, give an address where they do not live and deposit £2 million in an English bank account?

Surely it is not because, as reportedly attributed to Anarchasis, a Scythian visitor to 6^th century Athens: “Written laws are like spiders’ webs; they catch the weak and poor but are torn in pieces by the rich and powerful.”

Photo by Bence Balla-Schottner on Unsplash