With Christmas approaching, it’s timely to remember the manager at the Southend branch of the British Tax Office who was jailed in November for robbing the staff Christmas Savings Fund. She managed to skim over £160,000 from her colleagues’ savings before she was caught and sentenced to two and a half years in prison.
It seems 2013 has been a champion year for corporate dishonesty and the shredding of reputations. It also appears that the greater the sum of money involved, the less the chance of going to jail
Early in November it was announced that SAC Capital Advisors, one of the biggest American hedge funds, would plead guilty to criminal fraud and pay $1.8 billion in fines and penalties for insider trading – the largest ever such penalty – plus the termination of their investment advisory business.
The FBI said the company’s guilty plea demonstrated that “cheating and breaking the law were not only permitted but allowed to persist.” But so far no sign of anyone going to prison.
SAC’s initial response provides a clear lesson for professional communicators and issue managers. “We take responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC’s liability. The tiny fraction of wrongdoers does not represent the 3,000 honest men and women who have worked at the firm for the past 21 years.”
It sounded good and probably made the corporate lawyers proud. However someone soon had second thoughts and a new statement was quickly issued which deleted the “tiny fraction” line and replaced it with: “Even one person crossing the line into illegal behaviour is too many and we greatly regret this conduct occurred.” We’ll never know what discussion took place between the PR Department and the lawyers, but it’s a pretty sure bet that cost to reputation was not the top priority.
Then, just weeks later, it was announced that banking giant JP Morgan Chase would pay a record $13 billion settlement with US regulators for selling bad loans during the housing crisis. This is, of course, the same organization which had recently paid $1 billion to US and UK regulators over the so-called “London whale” trading debacle, which cost their shareholders over $6 billion.
Is it any wonder that the Edelman Trust Survey found 27% of respondents around the world don’t trust CEOs to tell the truth, with banking and financial services the two least trusted business sectors. And the Weber Shandwick Safeguarding Reputation survey found the leading triggers of reputation failure are financial irregularities (72%), unethical behaviour (68%) and executive misconduct (64%).
None of this is much comfort to the naughty British tax officer serving time in prison. But it is a reminder for issue and crisis managers everywhere that 2014 is likely to be yet another challenging year.