“Blind Eye” Culture in Business

A good article written by Rowan Bosworth-Davies and posted on Linkedin today prompted me to respond favourably as follows:

This article has a shown a good understanding of “blind eye” corruption that is, unfortunately, at the top of many banks and many businesses. It could be argued that HSBC, Tesco, GSK and many others (from the UK alone) pushed bottom line growth at the expense of ethics and (often) the law while senior management profess no knowledge whatsoever of the problems that were under way in their companies.

When I wrote “Last Line of Defense” 15 years ago, I tried to explain in the book the process that a business (written there as a fictionalised US defense and aerospace business) went through that propelled it to commit corrupt acts while keeping the boss clean. Having worked in that industry, it was something that I had seen at first hand and 15 years’ later, it persists. Businesses are subject to major stresses and opportunities that drive them to the edge of acceptability.

For large companies, the penalties need to be huge to stymie the desire to do wrong and they need to be enforced. Prevention is the best cure, of course, but that depends on rigorous independent scrutiny by NED’s /Independent Directors that has not showed itself to work at HSBC.

It needs external auditors who should be required to carry out audits of potential corruption and the company’s adherence to processes that prevent it.

It requires leadership that drives in a culture of ethics throughout.

It requires a business that makes it clear that is has to know that each area adheres to its ethical culture and where there are no areas of secrecy – again, as is claimed at HSBC.

The banking crises and the problems at Wall-Mart, Tesco, GSK and elsewhere show that the problems that bedevilled the Defense and Aerospace industry (and may still do in some areas) is common throughout finance and elsewhere. This culture is one that has been tolerated by Governments – especially in the UK where prosecutions are not made if there is doubt of success. This is a problem in corruption and money laundering that makes top business people complacent. Only in the USA does there appear to be a drive to resolve this problem – at least via prosecution.

Banging the Cultural Drum for Banks

 

Banging the Cultural Drum for Banks

Banging the Cultural Drum for Banks

Culture – the total of the inherited ideas, beliefs, values, and knowledge, which constitute the shared bases of social action (Collins English Dictionary) 

Ethics – the moral value of human conduct and of the rules and principles that ought to govern it |(Collins English dictionary)

“The epitome of the multifarious cultural and ethical failures at the bank include the fact its investment banking arm, now due to be largely shut down, was only able to thrive by cheating, and that the arm, now called Markets and Investment Banking (M&IB), continued to rig various benchmarks, swindling investors and counterparties, for years after the bailout.” Ian Fraser – describing one aspect of his book “Shredded: Inside RBS The Bank That Broke Britain”


 

Just last week, Cass Business School and New City Agenda issued: A Report on the Culture of British Retail Banking . It is a useful analysis of the banking failures but, for once, centred on culture at the banks. As such, it deserves attention.

In a previous note my focus was on how the banks had got themselves into a grand mess because they rushed into a culture that was short-term and focused more on individuals working for the banks than their customers.

The Cass / NCA report is a useful attempt to understand the cultural problems of the banks and what needs to be done to change those problems. It seems churlish of me to sound a note of concern with the analysis bearing in mind how much I have written on the need but, despite the work that has gone into the study, I do find some serious gaps in the assumptions, the recommendations and the risks.

 

  1. Society

 

One concern is that the study suggests banks (particularly the larger ones) are similar to any other large companies – like those in the oil sector (to which reference is made concerning culture change) – and should therefore be treated like those in other sectors. Unfortunately, banking is unlike any other sector.

 

  • No other sector creates money;
  • No other sector holds the rest of the economy to ransom through its systemic economic risk;
  • No other sector is so intertwined with economies and governments.

 

For these reasons, the thought that banks have to be allowed to take care of themselves (which is a crucial assumption of the report) contains dangers that the report does not examine. While banks are intimately involved with other organisations in both private and public sectors, the report does not seem to share a view that wider society has a stake in them. The fact that general taxpayers are paying off the burden of their recent misdeeds is a real and proper concern. It is not just “customers” (a key focus of the report) that feel the problem of poor investment in IT or bad service – it is also all those affected by huge government deficits and cut-backs that have been the result of the banking induced crisis. I don’t see this recognition.

 

What this means is that banks cannot just be left alone to reflect on their cultures. There does need to be a societal involvement in the cultural thinking that shows banks understand what they are there for – which is different to most industries. This culture is not just about being sustainable or not creating “externalities” (like oil companies should be focused on – e.g. pollution) but on the central role that banks play in society and the huge risks that they provide. This short note is not the place to examine the role that banks should perform (although I have touched on that before – https://jeffkaye.wordpress.com/2012/02/05/banks-and-time-travel/) but their national and economic roles and their inherent risks have to be important aspects of their culture.

 

  1. Ethics

 

The mention of ethics in the banking system is a touchy one. Ethical codes are often there to be abused (viz. FIFA) but the banks perform such a key role in society that they should not be allowed to differ in how they develop ethics codes and they should be regulated around ethical behavior.

 

The word “ethics” appears fleetingly in the Cass / New City Agenda report. Yet, it should be the basis upon which culture is developed. It is via an ethical approach to its customers and wider society that banks need to be based. The report focuses on how banking culture has been “Sales” led (even excessively so) but this would not have happened if banking culture and banking leaders had been ethical in their approach.

 

  1. Accountability

 

Again, the report states that the banks operated a “Sales Culture” – and was excessive in that direction. Of course, all businesses have to operate a sales culture to a degree or they go out of business. But, the extreme form of “sales culture” that operated was enabled by top management.

 

It can be stated reasonably that banks operated (and still operate) without a culture of accountability. Another crucial organisational mandate that appears to be missing from the analysis in the report is this one – individuals within the banks seemed to be accountable to themselves or to just small groups. The businesses did not seem to have areas of key accountability for such fundamental mistakes and still do not. Any successful business or organisational culture requires accountability – culture is driven from the top so that it must be clear that “the top” has to be clearly accountable for major deviations.

 

This accountability has to be within the Board, Board Committees, Regulators and Auditors. The culture has to be clear that accountability is embedded within it.

 

  1. Governance

 

This is linked to accountability, of course, but Governance has to include the oversight of business culture – which is itself wrapped within the overall purpose of the organization. Governance is, by law, the responsibility of the Board acting on behalf of shareholders. However, in the case of large banks – and this becomes a crucial requirement – societal governance should also be required. A bank’s board, when deemed to be large enough, should include Directors who are there to judge whether the bank is meeting its societal objectives – a privately owned, market-driven business but with key societal objectives. This is, therefore, linked to both accountability and societal inclusion. Having The Banking Standards Review Council under the auspices of Sir Richard Lambert is fine but this Council is likely to be dominated by the banks – indeed, Sir Richard is looking to the banks and building societies for members – a bit like the police governing the police. The BSRC (if it is to work at all) needs outside members who are not influenced overmuch by the banking fraternity.

 

  1. International Norms

 

Another problem for the banks (and the report) is that we now live in a global economy. As in the period leading up to the disasters of 2007/8, our banks did not act alone but were in a group of western banks throughout Europe and the USA that played the same game. Next time, the centre of the storm may be elsewhere.

 

This requires some real thought being given to how British banking will (if it adopts sustainable cultures) not be persuaded to ditch their ethics if others go haywire as in 2007/8. This requires international banking to be based on the same footing. It may require a set of ethical baselines such as the one that EITI (The Extractive Industry Transparency Initiative) has developed for that industry.

 

  1. Sustainability

 

Covering all of the above is the need to banks to be properly sustainable – and the report does focus on ridding the industry of its short-termism. However, this is, again, for both the industry and for society to develop a sustainable path – as banks are often too big to be left to themselves and have shown a distinct lack of ability to judge what will make them sustainable.

 

  1. Risk and pay

 

The final issue I believe has been de-focused is that bankers pay themselves when they do well and just lose bonuses when they don’t. Assuming they work within the law, why are bankers paid as entrepreneurs on the upside but as staff on the downside?

 

If pay is to be maintained on the upside, then so does the opposite apply. Entrepreneurs are risk animals that bet their own money to reap fortunes if they succeed. A major flaw in our economies is how the financial sector and managers within it (to a reduced extent the same in other sectors) have captured the winnings from those with “skin in the game” – which used to be the shareholders.

 

The latter suffer the risk of loss on the downside, bankers do not. This should be changed.

 

21st Century Banking Culture

 

Society, Ethics, Accountability and Governance appear to be the basis for any banking system in the global economy of the 21st Century. While the report is highly practical and research based, leaders within the UK (not just bankers) should be developing the strategies for the future based on a society that will perform and that we want to be part of.

 

Banking is too important to be left to just practical considerations. Real leadership is required and unless societal, ethical, accountability and governance concerns are fully embedded into banking culture, the same problems will arise time and again.

How Corrupt Are the Banks? Corrupting Cultures.

“Rigging the system to fix their bonuses. The word “corruption” is not enough to describe what they were doing.”

 

So stated one expert observer on Radio 4’s Today programme this morning (November 12, 2014) about the Foreign Exchange corruption in the world’s banking systems. UBS, RBS, Citibank, JP Morgan and HSBC were fined $3.4bn and Barclays is still to settle.

 

The travails at Tesco on which I have recently written, appear almost trivial beside the corruption (and, yes, “corruption” is the word to describe what was happening) that pervaded the western world’s banking systems leading up to and well beyond 2007.

 

The Bank of England apparently feels exonerated by the fact that no-one there knew anything about the foreign exchange mis-dealings at the five (or six) banks now fined. Just like the protestations at Tesco’s auditors (PwC) who, after 30 years, knew nothing about the culture changes that were at the root cause of Tesco’s recent failings.

 

Culture is the root of corruption

 

Francis Fukuyama in his excellent books “Political Order and Political Decay” and “The Origins of Political Order” showed how culture is at the root of society at the national level.

 

This is as true of companies – complex adaptive systems if ever there were any – as of nations. Companies are directed entities and depend on senior management and Boards allied to the competitive and regulatory environment in which they exist for the culture that they employ. The culture of every business is different – depending on the specific people they employ, the rules they employ, the country and region they exist in and the external environment.

 

The culture of any business organization is not a secret to those working within in it and is not a secret to those who work closely with it.

 

When a culture goes bad, as it clearly did in the case of Tesco and on a much broader and deeper scale in the case of the banks, it is not sudden and evolves as a result of changes that are both internal and external. Culture change has been the topic of many books and papers since well before the advent of quality management and Deming but these books tend to dwell on how to improve the culture to one of quality control or of “excellence” (as in Tom Peters’ “7 S’s”).

 

Unfortunately, there is little literature on how to understand corrupting business cultures in order to make changes that impact early enough so that customers, the business and shareholders are not hurt. The issue with banks is that nations have been hurt as a result of the toxic atmosphere in these institutions and the noxious emissions that resulted.

 

This cultural health and safety aspect of banking is clearly not understood by regulators (nor, indeed, by Directors and Audit Committees let alone external audit firms). Regulations are all about legal change and regulators are, to a large extent, ticking and checking against a set of procedures in the same way that external auditors carry out their roles.

 

The prime aim of such regulators seems to be to do a job so that they cannot be blamed for any failures. The Bank of England – crucial to the proper oversight of our financial systems – has failed so often in the past ten years but now seems comforted that no-one inside the BoE knew what was going on. RBS’s own (relatively) new CEO (Ross McEwan) voiced his anger on the BBC at the actions of “a very small group” of foreign exchange traders ruining everything for the many good people that work for RBS. He was asked the right question by the BBC interviewer (Kamal Ahmed) – “is culture changing enough”? McEwan responded that it was not changing quickly enough. But, the bad culture became institutionalised (as Ian Fraser’s excellent “Shredded” showed)  and the thought that senior management did not know of such a culture existing within such a key area of the bank is too sad to be true.

 

Walk into any office of any organization and any seasoned business manager will detect the culture. Ask some questions and listen to the responses. Any organisation is based on how its culture works and who benefits from that cultural response to its aims and ambitions.

 

Short-termism, where bonuses are made through short-term risk-taking and often corrupt dealing, is bred in cultures that are knowable. For management to claim not to be aware is ludicrous. As many senior bankers said around 2008/9, they knew the culture was wrong but could not stop it as everyone (every bank) was the same – no-one was willing to stop.

 

Fukuyama describes well how corrupt societies work where lack of trust exists around the centre (e.g. government) and where corruption is rife. No-one is wiling to be the first to pay their proper taxes, for example, if no-one else does. The same was true with the banks – everyone was corrupt, so who was going to stop the game? No-one. Now, no-one trusts the Banks – supposedly, a central plank on which wider society floats.

 

With the foreign exchange corruption, which occurred much more recently, there seems to be little or no excuse. The banks have been going through huge structural re-assessments since they sank in 2008 and senior management were being changed along with it. The Bank of England should have been focused on critical market areas (Foreign exchange transactions in London – 40% of the world’s transactions take place here – are hardly trivial) and should not have been unaware of the overhang of a corrupt culture in UK banks. To claim otherwise is nonsense.

 

The culture within regulators has to be changed along with the banks. While no-one claims they are corrupt cultures, a culture of defensiveness, box-ticking, shifting blame and lack of knowledge is the worst cultural set for a regulator. They need (like external auditors) to be responsive to societal needs – not tick and check but pro-actively understanding the organisations they are supposed to be regulating (or auditing). This is not an easy task for organisations that appear to be completely incapable of doing this important job – not wanting to rock the boat before it sinks. But, rocking the boat may throw out those who are bent on sinking it before it sinks – that is what good regulation (or auditing) is all about.

Was Tesco Corrupt? – II

Corrupt cultures in any organization or city or country don’t happen by chance. Tesco is a microcosm of the real world where activities are engineered by those in authority to create an atmosphere of pressure – maybe extreme pressure.

(earlier post on this: Was Tesco Corrupt?)

Listening to Melvyn Bragg’s “In Our Time” on Radio 4 today about the Haitian Revolution, it is easy to be complacent about how much we have changed. Slavery in Haiti was extreme – 90% of the population enslaved and under conditions that we in the West would rightly be scandalized about. Yet, we see similar conditions in many parts of the world today – countries like Equatorial Guinea where Transparency International is working to alert the world to tremendous poverty and lack of rights that are accorded to its people because the elite there takes virtually all the revenue from oil resources. Showing why “per capita GDP” data is, on its own so misguided in a world which is moving towards more income inequality, Equatorial Guinea has a per capita GDP on a par with Italy – yet most citizens lack access to clean drinking water.

 

The extraordinary problems that Equatorial Guinea has (caused by extreme corruption) may make any comparison with the UK seem a step too far. Surely the issues raised by the mis-accounting at Tesco is not even similar to what happens in Equatorial Guinea, Angola or other nations where vast resources are corruptly taken by a few.

 

However, that argument is much like someone arguing that, because of wars in Iraq and Syria, we should be content and not concern ourselves with knife-crime in the UK or poor waiting times in the NHS.

 

Corruption is corruption and what we are witnessing at Tesco has been the corrupt mis-accounting of £263 million and the humbling of a once-great business.

 

Deck Chairs on the Titanic?

 

Almost understandably, writers on Tesco and the company itself portray the problem as a few people that were under severe pressure and made bad decisions to bring forward hoped-for future profits into earlier periods. The Chairman is now leaving and various senior staff remain sidelined.

 

The auditors, Price Waterhouse Coopers (PwC) claim to have been “misled” by senior staff that were carrying out the mis-accounting. No-one seems surprised that they missed £263 million amongst the billions that are moved into and out of Tesco.

 

Accounting is but a reflection of a business. It is notoriously hard to find major errors which management are trying hard to hide. Most accounting crimes are found via whistle-blowers (as in this case and cases like Enron – which led to the demise of one of the big accounting firms – Arthur Andersen – who were complicit and went out of business as a result). This is not to say that PwC are in any way complicit. The issue is that audit firms are not that good at finding fault and (after 30 years as Tesco’s auditors, with ex-PwC members of the Tesco Board and being paid £10m a year) there are always suggestions that audit firms don’t try too hard.

 

The Board seems to have been in complete denial of the issues. Not only did they not know that the accounting problems existed until the whistle blower blowed, but they did not “see” the culture that led to the problems. Non-executive Directors on the audit committee, for example, are usually transfixed by numbers – and usually fail to ask the hard questions.

 

How many companies operating from the UK into nations where bribery and corruption is the norm ask the hard questions in Board and less formal meetings even now that the Bribery Act (and before it the Foreign Corrupt Practices Act in the USA) has been in place for 4 years. Glaxo (GSK) is feeling the pressure now about how it did business in China – a country where corruption is / was the norm and GSK went with the flow for many years. Here, staff were under pressure to perform but did so with the help of corruption.

 

The numbers could have indicated the problem but the culture certainly would have. Yet, how many Boards understand the culture of the organization for which they serve and can connect the culture with the potential for corruption or even associate the two?

 

Business Culture is key to success – and failure

 

When the banks entered into their maniacal dance of death resulting in the financial crash of 2007 and thereafter (which we are still paying for – literally), it was their common casino and bonus culture that was to blame. Senior management encouraged their investment banks and those outside the traditional banking rigours to take larger and larger risks but also to defraud customers. Ian Fraser’s excellent “Shredded” about RBS (Royal Bank of Scotland) is an example of how individuals create the culture of a bank or any organization and then reap the whirlwind that follows – whether good or bad.

 

The worst business cultures see staff swept along like leaves. As a character in my own book “Last Line of Defense” said”

 

“A business can take on an independent existence of its own. It begins to direct the individuals within it, rather than the other way. There is a dynamic to a business which can make you feel like a leaf in a river, unable to change the river’s course. Eventually unable to change its own course, the leaf is swept away downstream. The river carries on as before.”

 

So, it happened in Tesco. The CEO demanded results and got them – trouble was, they were not real. Instead of Tesco being a great company with great products and services that its customers wanted, it relied on mis-accounting to boost results.

 

That is a corrupting culture. It corrupted staff to engage in non-value added activities that prejudiced the company’s future and were a direct result of the pressures of a business that was failing to differentiate itself through its proper business activities.

 

Some argue that no-one benefitted from this. Maybe true if all the culprits are shown to be culpable and pay back any bonuses and pensions gleaned from the additional profits and maybe pay for the corruption with their jobs. Saving a job and its not unreasonable salary through corrupting the numbers has resulted (arguably) in a threat to Tesco’s future that a focus on how to make Tesco a better business would not have done. Just like the bureaucracy in Terry Gilliam’s “Brazil” that took up all a country’s resources and added no value, so a corrupt culture spends far too much time “corrupting” and not enough adding real value. So, a business collapses from the inside unless the corruption is arrested.

 

This is true of any corrupt organization – business or city or nation – where corruption exists and exacerbates the already bad conditions in which those who are party to the corruption or affected by it have to endure.

 

Fine, Tesco is not Equatorial Guinea but it is in the same game when, as a respected multinational business, it engages in bad business practices – corrupt practices.

 

Learning the Lessons?

 

Tesco seems not yet to have learned these lessons or at least not admitted to them. Accounting issues, changing board members, adding new processes and the like are all outputs of decisions to change culture. Why doesn’t Tesco actively state that this is what is has to do and then establish how best to do it. If it does not, then the changes will not result in real change but be like those deckchairs on the Titanic?

 

 

Was Tesco Corrupt?

Corrupt = “guilty of dishonest practices”, “lacking in integrity”

Tesco is in a state of some chaos brought on by real market competition and has seen its business model threatened. It has always been a fighter – a company built on a culture that customers responded to well – a “pile ‘em high” culture that sought to bring low prices and wide choice.

This success was predicated by a market where the medium wealthy within society (middle class or in-work working class)– where most people existed – wanted good value and reliable products.

This outward superiority over the competition was managed through an internal capability highly based on staff knowing their job well, a high investment in systems that could gauge customers’ needs and supply them. To many suppliers it was a desperately competitive environment – with continuously lower prices and higher quality requirements.

How Corporate Culture can lead to Corruption

This culture was also, as far as can be seen, based on internal fear of failure – a numbers culture that relied on bullying to ensure that every day’s sales and profit figures were met. The Telegraph recently wrote on this subject where it said that: “Investigation into Tesco’s £250m profit shortfall unearths ‘corruption’ of culture.”

For any organisation, the culture employed for the business is critical but the headline suggests that the culture of Tesco indirectly led to corruption. This corruption came about, for instance, through accounting issues – the taking of discounts from suppliers too early (well before they could be guaranteed, apparently). The culture led somehow to the corruption – it seems that Tesco’s leadership was blind to the corruption (which, it is claimed, was only a set of accounting issues – where no-one directly benefitted).

This is the norm in some companies – especially in highly competitive markets where the differences between the competitors are hard to judge. In food retailing, the differences are price, range, full shelves, ease of use, location, quality and service. In 2014, most of the major retailers have products and services that are comparable. Tesco clearly believed that it was the best and that its strategy was right. That strategy included a culture that demanded much of its people. Overall, that is not a bad thing – until it becomes a culture that demands results no matter how achieved.

In my book “Last Line of Defense”, I described a business in a different market sector (aerospace and defense) that operated under similar cultural disciplines. It was in a business that was highly competitive and sales and bottom line results were critical. Senior management made demands on its staff. Having made those demands, senior management did not want to know how those demands were satisfied. They imposed a culture and required the response.

In the book, the CEO demanded that long-term accounting changes were made to turn losses into profits for a countermeasures system – the RWR-50:

“You have all made clear to me how the RWR-50 is going to establish Global as a world player in the defense business, at last living up to its name. Well, the first thing you have given me is a problem that must be dealt with to allow those prospects to be nourished and grow to maturity. I want your total support in my actions. Anyone that feels unable to live with this should be under no misapprehension: the only option would be to find alternative employment.”

For staff operating in such an environment, successfully meeting such demands often resulted (within aerospace and defense in the 1970’s until now) in corrupt practices. This included outright bribery of customers to buy their products. Many industries such as aerospace and defense, construction, energy have bad reputations for such methods of corruption.

In Tesco’s case, there is no suggestion that I have seen of any corruption such a bribery – at least not since the Potato bribery case of 2008 where Tesco’s potato buyer was paid millions of Tesco’s own money to swing purchases in one supplier’s direction.Indeed, The Grocer included an article only two years ago that suggested bribery and corruption remained a serious problem between supermarkets, wholesalers and suppliers.

However, just as the culture of the aerospace and defense industry directly led to corruption (with senior management often claiming denial of all knowledge of such impacts), so the culture in Tesco is highly likely to have led to accounting irregularities and the suspension of senior management. If these cases are shown to be true, then denial of knowledge is no different.

Indeed, the worst of the aerospace and defense companies, involved in long-term projects, have for many years developed ways to control accounting of such projects. Losses have been turned into profits – legally in many cases – as accounting for the future is indeterminate and unauditable. Notions of conservatism (supposedly the hallmark of good accounting) are thrown aside when senior management make different demands and shareholders need to see higher share prices and better dividends. This often led to accounting changes in that industry. It is no surprise that accounting issues are central to the likely problems at Tesco.

Governance and Culture

Of course, these accounting problems are an outcome of the culture. Bad management (misunderstanding changing market patterns and / or unable to resist them) relies more and more on a culture of threat and intimidation when things go bad or just tougher. Senior management then rely on the fact that they did not ask for accounting irregularities to be able to say that they had no knowledge – they are innocent (as innocent as Henry II was innocent of the murder of Thomas a Becket).

Some might also argue that no one directly benefitted from the corruption that is alleged to have existed at Tesco. This is also not the case. Accounting changes that improve stated profits have an impact on job security (no-one looks for “alternative employment” if they meet their targets), bonuses, share prices. Of course, unless the business then grows through increased demand, the accounting problems show up (as they have done at Tesco as the tide has gone out).

This is a serious issue for senior management. The Bribery Act of 2010 introduced tough requirements on senior management in cases of bribery. Where bribery and similar corruption is found in a company, senior management can no longer hide behind a veil of “no knowledge” of the bribery or corruption. It is now required that they are able to show that proper processes were in palace to ensure that such bribery and corruption were minimised or, better still, eradicated. Where it is clearly not the case, then senior management (Directors) can be held liable.

Good governance has now to be firmly enmeshed within a culture in a business as far as the Bribery Act is concerned. But, the absence of such good governance is shown in any company that has a culture of threat and intimidation that is likely to lead to pressure on staff to rig the statistics. In the Bribery Act, such a culture would be a sure sign of likely Director culpability. What is the difference within Tesco – if such accounting allegations are found to be the case? Although unlikely to be subject to the Bribery Act, the senior management culture at Tesco clearly led to a lack of due process that appears to be no less culpable. It is surprising that the Non-executive Directors and auditors also missed the clear links between bad culture and poor governance.

The pressure to make results no matter what resounds throughout a company. No one in the company could be immune from that pressure nor would they (at senior levels) be in any doubt of the repercussions that ensue. Accounting irregularities are an outcome of bad culture and bad governance. The Bribery Act has shown that senior management (the Board) has a direct responsibility for ensuring that culture must include good governance where bribery is a risk. There is a direct link between culture and governance and, where corruption exists, all senior management are normally culpable – processes should have been in place to minimise the risk of such “accounting irregularities”.

Bad culture leads to bad governance and potentially to corruption – the links are known and understood.

If the allegations are proven, then Tesco was corrupt. Probably not alone.

Go to:

Was Tesco Corrupt? – II