Integrity must be the new message from the top, says Sants

October 13, 2010

At the risk of infuriating Andrew Marr, I intend to commit my thoughts to a blog on the subject of corporate ethics. No, this is not my rumination on a firm with headquarters in Chelmsford, but on the thorny issue of business integrity.

Gekko says that greed is good and now it's legal

Gordon Gekko is back in British filmhouses in Wall Street 2: Money Never Sleeps with Michael Douglas reprising the role of the unprincipled slash and burn moneyman.

In the new film we see an unrepentant Gekko in the days of boom before the recent banking bust celebrating the fact that “greed is good and now it seems it’s legal”. According to the film’s director Oliver Stone, individuals like Gekko have passed their date stamp, sharp suited dinosaurs who have been replaced by the major banks and the hedge funds: “They are the big players now…the money’s too big.”

With impeccable timing, in the same week of the film’s UK release, Hector Sants, chief executive of the Financial Services Authority, addressed the issue of corporate culture and ethics in a Mansion House conference speech, and how in the banking industry a company’s value system was critical in shaping the behaviours and judgments of its people.

Management, he said, had a critical role in determining the culture of an organisation and setting the direction and tone of a company so that employees made the right decisions. He then posed some questions that should be asked about ones firm:

  • Do management model good behaviour, i.e. make their values ‘live’?
  • Do management articulate a clearly understandable strategy?
  • Do management offer guidance and training to assist in good decision-making – for example, on ensuring the fair treatment of customers and effective risk management?
  • Do management incentivise good behaviour and deter poor behaviour and how?
  • Do management encourage the required diversity to facilitate challenge to ‘group-think’?
  • Do management articulate their vision of the right culture? (Linking the brand of the institution and its culture)

These questions should not be asked as part of a box-ticking exercise; the company culture must “ring true and be consistent with what the firm does”.

This is not always the case, he said. Some of the causes of the recent crisis were rooted in the behaviours of firms and organisational cultures. And, worryingly, some senior managers had evidently failed to learn the lessons and were repeating their mistakes as if in defiance of Einstein’s definition of insanity (doing the same thing again and again in expectation of a different result).

Companies that fail to act with integrity and to ensure good behaviour is part of the lifeblood of their organisation face regulation, he warned. He could have added that they might also find themselves the subject of Mr Stone’s next cinematic opus.

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Searching for the truth about WMD

October 21, 2009

Yesterday I attended a screening of a film tracing the build up to the war in Iraq and the gathering of flawed intelligence by US and British security services to justify the invasion. The director of wmd. David Holroyd pieced together “real” CCTV and surveillance camera footage to tell the story of an MI6 desk officer who stumbles across the forged documents and phoney dossiers used by the Bush-Blair administrations to build the case for war.

Holroyd described the independently made movie as “a fictional account inspired by real events” and while audiences may have concerns that the filmmakers take too many liberties with the line between fact and fiction as they plot a dramatic narrative, particularly at the denouement of the film, the subject matter is timely given the launch of the Iraq Inquiry chaired by Sir John Chilcot. “In times of universal deceit, telling the truth becomes a revolutionary act,” says Holroyd, quoting George Orwell.

The film is also intended as a salutary reminder of the intrusive nature of the spying state and the ubiquitousness of surveillance cameras in modern Britain. The film has a limited release but is available to buy or download.