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There is much more that boards need to take responsibility for when it comes to protecting and enabling an ethical culture, says ethics expert, Jane Arnott. Complexities arise early when boards seek an organisational culture that is aligned with purpose, values and strategy – and also task their CEO with driving and overseeing the embedding of that same culture.
Integral to ethical culture is the opportunity to freely and fearlessly speak up. Internal whistleblowing processes however enable too much oversight by too small a team. This is high risk and brings heavy duty emotions to the fore.
Recently, during a professional ethics workshop, participants were asked to note what they associated ‘speaking up’ with. The list of options included everything from ‘doing the right thing’ and ‘protecting colleagues’, to ‘being a troublemaker’ and ‘being disloyal’.
Unsurprisingly, ‘doing the right thing’ came out on top. The connection between speaking up and doing the right thing appeared robust and unyielding.
The next slide however was much more telling. It related to each person’s anticipated dominant emotion if it was them, personally, speaking up.
The switch was instant. From asking something straightforward, to asking something that revealed more about their moral compass, meant more time was taken. The participants deliberated.
‘Nervousness’ and ‘apprehension’ were identified as the two dominant emotions each of the participants imagined they would feel and experience if they raised a concern or identified wrongdoing.
It was insightful that the level of alignment with negative emotions, the ones that often lead to a downwards spiral, took precedence. Such negative emotions have panic, isolation and shame as their playmates.
While unscientific, this simple survey highlights the emotional challenge that lies behind doing the right thing.
Overcoming this challenge and ensuring that employees are equipped with the skills, and surrounded by the support needed, will best enable speaking up and the creation of an ethical culture.
And this doesn’t come easily. Time and time again, employees will revert to fear-based behaviours rather than proactively looking ahead to achieving an outcome that prevents wrongdoing from taking hold.
In particularly toxic situations, where the whole of management is implicated, it is only through reaching out to independent external entities such as Report it Now with their enterprise case management system, that beneficial exposure and time-sensitive action occurs.
Take Wirecard and the company’s 1.9B fraud – perpetuated over years and across continents. It took less than three weeks for Pavendeep (Pav) Gill, Wirecard’s newly-appointed senior legal counsel for the Asia Pacific Region, based in Singapore, to sniff out more than just a rat. Within three months the rat had become multi-headed and multi-dimensional – spreading across continents to the German parent company.
Earlier, EY had learnt, from an internal EY whistleblower, that fraud and fake accounting was suspected and that Wirecard had attempted to bribe an auditor in India.
Jan Marsalek, Chief Operating Officer, Wirecard who has been on the run from German police since June 2021 and is now a fugitive on Interpol’s most wanted list, portrayed EY’s whistleblower letter as the action of a rogue employee.
He then shut down the initial EY investigation. Too easy.
In a BBC World Service Interview titled Heart and Soul, The Sikh Whistleblower, Pav describes how it was his Sikh faith and the support of his mother who also drew on the teachings of their faith, that kept his whistleblowing journey on course. While his morally disengaged colleagues told him ‘not to worry’, ‘not to think about it too much,’ and to ‘just do your work’, Pav would not be swayed. He brought in a local law firm who confirmed his concerns.
As is common when a powerful senior management team is implicated, Wirecard then began a campaign attacking Pav at every opportunity across a range of menaces.
Even the German regulators became duped.
Following an anonymous email, sent by Pav’s mother, to Clare Rewcastle Brown, a British anti-corruption journalist focused on South East Asia, the London based Financial Times (FT) published a critical article.
So convincing and powerful were Wirecard’s management that they convinced German regulators that the journalists were complicit in a strategy to depress their company stock. Subsequently the Financial Times found themselves at the receiving end of an investigation.
All of these outcomes are red flags that are directly linked to internal whistleblowing processes.
When a regulator can’t discern between valid concerns and the manipulations of the business power elite, when management teams conspire, and when a genuine whistleblower finds more guidance in his faith than those around him, there are numerous lessons to learn.
“Coming between some very powerful people and a lot of money – of course they (the whistleblowers) were in danger,” was one of the comments made by Rewcastle Brown.
This is the reality in any country where bribery, fraud, corruption and harassment is commonly denied.
Boards therefore can benefit from upskilling themselves and understanding the real risks that whistleblowers face, the external makings of an effective speak up processes and the support systems that need to be in place to.
They specifically need to review internal processes that, time and time again, are proven to promote sustained deception.
Theranos and now Wirecard provide evidence that critical information is blocked or denied by an unethical leadership and an uncritical, morally disengaged company culture.
In both cases the whistleblower was ruthlessly discredited.
Regulators, including those who oversee regulatory reviews, can also benefit from having an open mind when it comes to the posturing of large and powerful entities. The professional and passionate lesser voice brings with it the clarity that comes from having less to lose, less financial stake and, arguably, greater faith and values to guide it.
If boards want to sincerely encourage speak up or whistleblowing they must create and ensure that speak up channels are safe, that they include external options, and that whistleblowers are fully protected from all forms of retaliation.
Similarly, regulators would be wise to listen instead of acting with hostility towards anything that doesn’t fit their narrative or that of the big and powerful vested interest groups.
Whistleblowers can’t chose their enemies but they should be able to know their friends.