Nothing should surprise us anymore when we learn of yet another large corporate scandal involving ethical lapses, poor controls, and coordinated willful blindness.
Greed, arrogance, and entitlement continue to prevail and exist at many levels within organizations. The desire to make a lot of money apparently exceeds what is fair, reasonable, equitable, and legal.
This was clearly the case at Deutsche Bank where U.S. and British regulators secured a record fine of $2.5 billion and an admission of guilt for wire fraud.
What did Deutsche Bank do? In a scam involving twenty nine managers, traders, submitters, they manipulated the London Interbank Offered Rate and its Euribor cousin from four different offices. The majority of these dismissed individuals are now facing criminal charges.
According to a British regulator “One division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market. This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained.”
How do ethical lapses take place and grow?
The answer or answers aren’t simple.
In a world where growing revenues and profits is so heavily emphasized, the pressures to perform and achieve financial goals are simply immense.
Like an avalanche, they overtake and trump ethical values, systems, and controls.
Once this hideous imbalance occurs and is not corrected immediately, it can mutate and spread like a disease.
Willful blindness permeates and settles in as employees take on more risk oblivious to the increased dangers.
I have previously commented that most corporate fraud is committed by at least two people or more. Government regulators and prosecutors generally classify this as a conspiracy.
The greater the fraud, the more people are typically involved perpetuating the crime and benefitting from it.
We can build sophisticated systems, control mechanisms, and all sorts of monitoring capabilities to detect irregularities.
However, they won’t stop ethical missteps from taking place linked to greed, arrogance, and entitlement.
There is one vaccine and anecdote that can provide answers to the question posed. It is the creation of a moral compass formed at an individual level in conjunction with organizational values.
Building meaningful and ethical cultures takes time and is not the result of a magic pill or injection.
It is a strategy and a value system that starts with executive leadership and filters down into the organization.
It is visited every day and shares an equal stage with other corporate initiatives.
Every individual is responsible and accountable for their conduct. There can be no excuses or explanations to the contrary.
Those of you who work in organizations owe it to your fellow employees, customers, suppliers, stakeholders/shareholders, and the communities you serve to never turn a blind eye to questionable conduct.
Failure to report poor conduct, unethical requests, or even illegal behavior can have drastic implications for any company beyond what we might initially believe or comprehend.
To the leadership team at Deutsche Bank: I say clean up your act now and demonstrate to all of us that you can lead with values in driving your business.
It is imperative that we build, monitor, and sustain our moral compasses each day. This is the best foundation I know of that can confront moral dilemmas of all types and sizes.
Do your best each day and remember that reputations can be destroyed with a single act.
Be well/blessings, Mark
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