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

March 30 2021

Perhaps there was a clue in the name: Archegos. Arch. Egos. As a description of many in finance it can scarcely be bettered. A novelist might even think it a tad too unbelievable, unless you were seeking to write satire.

But why bother when reality serves it up on a plate.

The founder of Archegos Capital Management, Bill Hwang described himself in 2008 as “like a little child looking for where can I invest to please our God.” Not long after – in November 2009 – Goldman Sachs’s Lloyd Blankfein described  bankers as “doing God’s work“. Oh dear. The full extent of what bankers had been doing had yet to reveal itself, whether to God or anyone else. Still, PR advisors would do well to note that such statements do not impress. Rather they tend to bring to mind the Ralph Waldo Emerson quote:

“The louder he talked of his honour, the faster we counted our spoons.”

Back to Mr Hwang. At the time of his humblebrag he was running Tiger Asia Management, which ended up being one of the largest investors in the expanding and profitable Asian market.

What God thought of Mr Hwang’s activities is unknown. What the SEC thought is, however. For in 2012 following a lengthy investigation, also involving the HK regulator, he pleaded guilty to insider trading and manipulation relating to trading in various Chinese stocks in late 2008 / early 2009. Surely not when he was trying to please God? Yes, apparently so.

A humongous fine inevitably followed. And almost as inevitably, the following year in 2013 Tiger Asia Management was wound up and Archegos rose, Phoenix-like in its place.

Now it is in trouble as a result of risky and very large investments having soured. Also in trouble are a number of banks which funded it, provided it with services and helped it trade. Questions no doubt are being asked – and, if not, they should be – about banks’ exposure to the firm, was this within risk limits, why so much leverage and so on. Other questions might also be asked: what due diligence was done? Was a fund run by a convicted insider dealer really a suitable client? How was it monitored? And so on.

Still, since bragging seems to be the fashion, might I modestly refer you to this article and my comments on what is often found when something goes wrong: “…so often, in virtually every case, there were bloody great red flags, or there was a clue that was missed.”

The name might have permitted a wry smile. Mr Hwang’s track record should not have done. Does no-one ever read this stuff?

Photo by Orkun Azap 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.