We are all familiar with the 1988 classic comedy film Dirty Rotten Scoundrels, starring Michael Caine and Steve Martin, where two con men from different backgrounds try to out do each other in swindling $50,000 from a wealthy heiress. The film is set in the French Riviera where the rich and famous play. As the movie plays out, both men try and out do each other to gain free meals and access to large sums of cash.
Sound familiar? If you have been paying attention to the news over the past few years it sounds like it could be set in a local council, state government ministers office or union headquarters.
Dodgy councillors, crooked government ministers and entitled union reps. The past few years has seen a raft of public officials exposed for fraud and corruption ranging from multi-million dollar frauds, conspiracies to defraud, large scale bribes and kick-backs, not to mention the misuse of public and member contributions to fund lavish their lifestyles.
It’s great to see some of these issues starting to get exposed but the real question is: Just how big is this problem?
Answer: I reckon its Big with a capital B. This is only just the tip of the iceberg.
The disturbing part is to stop and think for a moment at just how long this type of behaviour has been going on and just how much money has been defrauded and misused across councils, unions and government departments over the years.
There is no doubt the tide is turning in the court of public opinion, perception and expectations when it comes to this dodgy conduct.
Whilst it has never been acceptable to commit fraud, have undeclared conflicts of interest and use public money as your personal piggy bank, the tide is now turning with those witnessing dodgy conduct more willing to speak up and report it.
What is interesting is that in the public sector there are pretty strong mechanisms in place around fraud and corruption as it relates to public officials. There is prescriptive legislation by virtue of the Public Interest Disclosures (PID) Act which outlines expectations, requirements and protections for those making disclosures on fraud, corruption, misconduct and maladministration.
The legislation is often supported with various government agencies charged with investigating corrupt conduct involving government employees and public officials.
When compared to the private sector, the government appears to be streets ahead from a policy and legislative perspective. And perhaps the scandals that have come to light over the past 5 years around the country are indicative of the progress being made.
Despite these scandals, I suspect the problem is much, much bigger than any of us realise across federal, state and local government departments when it comes to undeclared conflicts of interests, hidden beneficial ownership in companies, kick-backs and cash-in-kind benefits. Likewise in the private sector, I suspect there is far more fraud and corruption than is being uncovered.
The relative success achieved in the past few years across both the public and private sector in uncovering fraudulent conduct and corrupt schemes should be applauded but it’s just a start of what is sure to be a long journey as we turn the dial on integrity and appropriate conduct.
To support this we need strong public messaging from government and corporate leaders far more regularly who make it clear that this type of conduct is not acceptable. And for those being caught, strong sanctions need to apply. I was thoroughly impressed (which is rare) in the sentence handed down to former NSW Resources Minister Ian Macdonald who was sentenced to 10 years for misconduct in public office. It is tough sentences like that, along with sacking and referral to police for private sector employees that will assist in turning the fight against fraud and corruption.
It is often easy to enact a new piece of legislation or a new corporate policy to say that you are taking these issues seriously however one of the most important aspects often overlooked is the effectiveness of your underlying operation to support the policy.
Here are some questions to consider:
How does it work in practice? Do the leaders of your organisation regularly promote their position on speaking up? It is one thing to have a policy and tick the box but how often do the leaders of your organisation talk about fraud, corruption and the organisation’s expectations? Leaders should be weaving into their messages regularly their stance on encouraging people from across the organisation to speak up.
Can your employees or members report issues safely and easily without fear of either being identified or suffering retribution? Can they report suspicions without being ridiculed? I often hear from those charged with managing their fraud and corruption response that they don’t want people to report all kinds of issues, have too many reports and so on. This is crazy talk. If you set the tone and make it safe to speak up you can put measures in place to effectively assess reports. Sometimes you need a few data points on an issue to launch an inquiry, if you discourage people from reporting hunches or suspicions you might miss an issue.
Is there a clearly defined process for assessing those reports and ensuring there is an independent approach to investigating the issues? Too often organisations handle tip offs internally which discourages people from speaking up, especially against senior executives for fear the matter will be swept under the carpet. An email managed by the CEO or Company Secretary’s PA. This isn’t really an effective way to encourage people to speak up. Sure you have ‘ticked the box’ and complied with your obligations but more can be done.
Are there the right mechanisms in place to protect those who speak up? How often do we hear about a whistleblower or someone who speaks up being made redundant a few months later through an organisation-wide restructure? Too often and it’s disgraceful. Have a person charged with overseeing your whistleblower or PID program is essential and their role is to ensure that both the protection and welfare of the person reporting is maintained.
Do those investigating have the right skills, capabilities and independence to do their jobs effectively? How many times do we hear about a personal assistant, the cleaner (joking) or chief executive conducting the investigation themselves? Too often. Last time I checked there aren’t too many PAs or CEOs who have been trained to conduct investigations, interview witnesses and table allegations to those suspected of committing fraud. There should be a clear separation between those charged with looking into an issue and those who will review the outcome and make a determination regarding consequence. Sounds simple I know but you would be surprised how often this doesn’t happen.
Lastly, does the organisation walk the talk when it comes to consequences? Once fraud or misconduct has been proven do they do the right thing and take appropriate action on those found guilty by terminating their employment and where they suspect criminal conduct refer to law enforcement? This is one of the biggest areas where all organisations tend to let themselves down. Too often I hear of examples where companies fail to apply an appropriate outcome, refer the matter to law enforcement and communicate to the rest of the organisation the consequences of committing fraud.
In Dirty Rotten Scoundrels, we see our two main characters Lawrence (Caine) and Freddy (Martin) so focused on their own misdeeds that they fail to realise that they have in fact been duped themselves. The parallel here is for those charged with mopping up a fraud or corruption issue. Don’t get so bogged down in the issue and trying to keep it quiet that you miss the bigger opportunity in front of you. Be firm on applying an appropriate consequence for those who commit fraud, be as clear and transparent as you can legally in your communications to the rest of the organisation regarding what has happened and what actions you and the organisation have taken.
It might not seem it at the time, but you have a real opportunity to turn a negative incident into a positive learning opportunity for your organisation.