Our Corporate Integrity Category
Many years ago, I helped to organize a slogan competition at both the Labour and Conservative party Conferences in Britain. It was fascinating to see what slogans the delegates came up with as they wandered past our stand, representing British advertising. Of course most of the slogans offered on both sides of the political fence were identical and extraordinarily unimaginative, indistinguishable from the official party slogans at the time.
You know the sort of thing: “Forward to a Bright Tomorrow”, “Leading the Future”, “Power to all the People”, “We Make the Tough Decisions”, and so on. I cannot even remember most of them, except one, the one that I decided was the best, as it happens, from a Labour Party Delegate. It was very simple, although it took me a while before my politically overworked and feverish mind could encompass its simplicity:
“Tax is the cost of living in a civilized society”.
How true – and how rarely stated – is this?
The idea behind it is as old and as simple as buttons but the implication is huge, opening up a new line of significance for the assessment of corporate reputation.
Powerful individuals and big firms should be assessed, and their reputation proportionately enhanced, on the overall contribution they make to the communities and the populations in which they operate and from which they benefit. But I am not talking about corporate social responsibility, with its family days, site exhibitions, charitable contributions, patronages and local sponsorships. Important and valuable as these are, they are not the real benchmark of a socially responsible company.
The payment of tax, whether national, regional or local, is the real bottom line of corporate responsibility. Many companies cannot be faulted on their voluntary and well publicized efforts in social responsibility, but the same companies employ lots of effort and people to maximize their tax breaks and minimize their returns and are most unwilling see their profits taxed more than the absolute minimum necessary. Some of the tax bills of leading US corporations are, quite frankly, breathtaking in the complexity of thought and application that led to such a small assessment.
And many large US corporations are on record as insisting that the US should balance its budget and cut social spending so that the national debt can be managed but they also contribute hugely to that debt (of $14.5 trillion) with their extraordinarily and cleverly low tax bills.
A range of potential legislation comes to mind, but perhaps the first necessary regulatory change is that governments should remove tax concessions for all those self-serving charitable donations, sponsorships, scholarships and corporate foundations and simply ask corporations to enter a straight-as-a-die tax return on the basis of its turnover. The bigger the better. The bigger the more responsible. The bigger the contribution, dare I say, the better the reputation. I can certainly see a relatively easy corporate reputation assessment becoming available..
So, to corporations the message is: stop being charitable, stop these tricky and clever negotiations with the tax authorities and just start paying tax, for tax is the cost of living in a civilised society. For everybody. Including companies.
Somalia, the world’s most failed and least governed state, is incapable even of investing its own government with the powers and the authority it needs to distribute the aid that it gets from the international community. So it has little chance of protecting its people or fighting international crime. But up until some years ago, a very profitable part of the Somalian economy was coastal sea fishing. In this at least, Somalian coastal areas were a horn of plenty.
Thanks to excellent research by journalist Christopher Hyatt* and others, some uncomfortable details emerge that are perhaps not well enough known.
Following the 1991 civil war, large numbers of Somalian refugees fled to the coastal areas to escape the drought and warfare and in the hope of benefiting from the country’s long-established and successful fishing communities.
Soon afterwards, large foreign ships could be seen from the shore. These ships, from Europe and Asia, were entering Somali waters, driving away the native fishermen, and undertaking large scale fishing operations with drift nets and underwater explosives, also destroying coral reefs along with the previously sustainable Somalian fishing industry.
But the ships that were stealing the livelihoods of the fishermen were not only there to plunder Somalia’s marine resources. In 2005, a study conducted by the FAO found evidence of “illegal dumping of industrial and nuclear wastes along the Somali coast”. The United Nations Environment Program also confirmed that “Somalia has been used as a dumping ground for hazardous waste starting in the early 1990’s”.
So what had been happening just off the Somali coast was nothing less
than a bullies’ paradise, a mutually agreed and largely unreported free-for-all in the Horn of Africa region for international companies, who dumped their waste in the waters off Somalia rather than disposing of it properly elsewhere.
The Somali fishermen continued to scrape a living, but the fleets decided that even this could damage their profits. They started to chase out the fishermen. The High Seas Task Force, a group of ministers and NGOs who combat illegal fishing, reported that the foreign ships were caught “pouring boiling water on the fishermen”, also crushing smaller boats and “killing all the occupants”. In a country where famine had taken the lives of 240,000 people since the beginning of a civil war, the fishing communities saw no option but to challenge the invading fleets.
The local fishermen began arming themselves when heading out to sea and set up groups such as the Volunteer Coast Guard of Somalia, whose initial motive was to scare away the foreign ships with menaces. The Volunteer Coast Guard’s intimidation alone did nothing to deter the foreign fleets, so they decided to start boarding them, demanding ransoms for the release of their crew.
The tactic of hijacking and hostage-taking were successful. A type of Robin Hood style protection racket was born. Inevitably, this led to warlords and gangsters to take advantage and the local fishing boats armed in defence found themselves attacked not only by foreigners but also by other Somalis, who wanted their boats so that they could launch their own attacks on any vessel which happened to pass their way, whether it carried oil, food aid or bananas.
Now organized armed criminals (possibly financed by the pan-African direct action group al-Shabab) whose only motive is financial gain have learned from the desperate fishermen. Since the element of terrorism is also at issue, the international armed guards patrolling Somali waters have become less patient. An EU spokesperson has documented cases where “armed security teams have opened fire on fishermen believing them to be pirates” because their training “hadn’t been that good” in explaining that many Somali fishermen carried weapons in order to defend themselves from pirates attempting to take their boats, and trawlers attempting to take their livelihoods.
According to a recent BBC report, Somali pirates seized a record 1,181 hostages in 2010, and were paid many millions of dollars in ransom. In the fall of 2011, more than 300 hundred people were being held hostage by various pirate groups based in Somalia.
The economy of the coastal area, the Puntland, has now been transformed from reliance on fishing to reliance on providing the pirates with a suitable standard of living from the organized criminality.
Just feeding and housing the hijacked crews helps sustain the economy in Puntland. A BBC report describes life in a Somali pirate town: “Eyl has become a town tailor-made for pirates – and their hostages. Special restaurants have even been set up to prepare food for the crews of the hijacked ships. As the pirates want ransom payments, they try to look after their hostages.”
The pirates are a combination of ex-fisherman, ex-militia, and computer geeks. And they don’t see themselves as criminals. One interviewed by the New York Times said: “We don’t consider ourselves sea bandits. We consider sea bandits those who illegally fish in our seas and dump waste in our seas and carry weapons in our seas. We are simply patrolling our seas. Think of us like a coast guard.”
Somalia does not take action against these pirates; it cannot. It has a barely functioning government. A few years ago, there was no government at all.
So here is the problem. It’s one of those with local impact and global implication. It is not quite the same as is often reported in papers with a requirement for a fast, safe, comfortably predictable and intuitive story, but it relates a genuine grievance ignored, an environmental challenge turned down, and not least an ethical challenge of huge proportions spurned.
By 2012, international naval patrols in the Gulf of Aden were making it difficult for Somali pirates to launch attacks. But, at least 40 vessels and more than 400 hostages are still being held in or just off Somalia, according to the Ecoterra International group which monitors piracy in the region.
The truth is not the same as the reality. The UN had already proposed twice, in 2005 and 2006, that an embargo placed on fish taken from Somali waters would mitigate the problem, but they were quite simply ignored. No significant diplomatic action taken from this perspective has occured since. Most efforts now concentrate on making the seaway safe for the tankers and arresting the pirates.
In this question of global trade interests against a subsistence economy and ethical trade, public pressure could also encourage stricter regulation on EU-registered trawlers, were this issue and its history better publicized and distributed.
In a peculiar but direct way, the plight of those living in and around the coastal communities of Somalia, and most especially the way their life dependencies have changed from sustainability and fishing to dependence and criminality, have become the responsibility of all those who use and waste most of the world’s oil.
Somehow, the fact that this affects one of the poorest, hungriest and most needy countries in the world, means that nothing apparently can be done to hinder those sacrosanct world trade flows and their doubtless unintentional impacts.
*http://www.wessexscene.co.uk/politics/2012/03/28/we-have-helped-create-the-somali-pirate-problem/
“A lie can travel halfway ’round the world while the truth is putting on its shoes,” Mark Twain once said.
The desire to be first with the news, even at the risk of being wrong, is nothing new. But social networks and Internet accessibility have combined to contribute more errors into the newsfeed than ever, now that everyone has become a journalist.
With speed at a premium, some websites have built a following by actually trafficking in rumors and uncertainties. The ability to post quickly means that misinformation can be initiated and spread quickly, and although it can also be corrected quickly, few notice the correction, as they might have done more often in the printed press. In many cases no-one bothers even to retract, finding an excuse in the defense that rumor is itself newsworthy.
For those seriously and professionally involved in news and information, these developments are a menace. It is better to delay until you have the facts right, or you risk adding to the flood of misinformation and error. But you don’t get the headline and indeed your story may be spiked beyond retrieval by the time you have perfected and checked it.
So the bad drives out the good; the careless drives out the accurate and lies chase out the truth. It’s a truism that certainly predates the Internet.
The danger for us news and info addicts is similar to the fate that faces most of the world’s currencies (and their users). If currencies go on devaluing and pretend that they haven’t (the pound sterling is a perfect example of this over the last century), then in the end the whole system becomes totally devalued and therefore completely worthless.
A similar fate awaits people’s trust in news and information, especially from traditional outlets. There may be a collapse of credibility that will see news replaced entirely by entertainment, and information replaced by fiction. Should we be worried about this?
The signs have been increasing for some years, and there is some evidence that people are becoming more sceptical and even cynical. But I fear that in practice and overall the opposite is true. People are actually becoming more gullible, trusting and over-sensitive. Exaggerated fears, not large yawns, are the scourge of those trying to communicate directly, honestly and realistically.
When people believe nothing they will also believe anything. This is why we should all try to restore respect to dialogue, and value to communications in business, politics, economics, society and culture. And we must do it quickly, robustly and with settled determination. We must put on those shoes before the lie closes the circle.
Do governments need to have a good reputation? Reputation surveys are two a penny these days, but according to most such surveys on occupations in the USA or in Europe and probably elsewhere, politicians and government officials rank lower than used car salesmen.
This is not quite the same as saying that governments have a bad reputation, but clearly an appreciation of the reputation of government in general terms can be gained from some assessment of the politicians who aspire to government and the civil servants who work for it.
There is little to indicate that people have a consistent definition of what constitutes a good reputation. So, if a government is looking for a good reputation, what exactly should it be doing? My own first reaction would be to ensure that its hands are clean, that there is no corruption and no instances of unethical behavior in the actions of civil servants or their political masters. To be unfair about it, this has probably never happened in the entire history of the world.
But who actually cares if a government has a bad reputation if it is doing a good job for those who elected it (or even if they didn’t elect it?)

And where are we supposed to measure this reputation? If for example a government’s reputation is bad at international level among other governments, and if that same government is very popular at home, or if its actions and policies and approaches are approved of by its own people but not by those of other countries, then what is the reputation call?
And maybe the government wants to fulfill an international promise it made, for example at Rio 20 years ago. These actions may not go down well at home but they will be received well abroad. What is the reputation call on that?
For congressmen or other elected parliamentarians, it is always going to be difficult, because reputation is not well-defined as a quality, and is easily confused with popularity.
I think the answer may be that reputation is an irrelevant consideration for government, because the business of the government is not about reputation.
Government has a mandate, or in undemocratic countries at least a disputed claim, to govern the country and reputation has almost nothing to do with it when you consider the important requirements of legitimacy, transparency, popularity, and especially stakeholder selectivity.
In other words reputation means nothing until you clarify for whom the reputation assessment is necessary.
For government it is an entirely conditional word. Could it also be so for companies?
At the beginning of the AGM season here is a pertinent question.
How do you deal with people who hate your company? There are some organizations and even more individuals who dislike companies so much that their dislike can seem to border on an obsessive hatred, an inability to think rationally or with moderation. Or, at least, this is how it can appear to companies who are being challenged or even threatened.
Every company has them. They can be lonely losers, self-obsessed, wielding specific and narrowly targeted influence way beyond the real circumstances of their actual situation. They can be embittered ex-employees with a burning grievance or sense of having been swindled or unfairly dismissed. They can be powerful, influential, rich and externally obsessed, like Ralph Nader, millionaire, Lebanon-born American king of NGOs, six-time candidate for President of the United States, and hero of the campaign against the US car industry and General Motors in the 1960s and 1970s.
Admittedly most companies hardly ever bother with the first two categories, but the third category is a recognized problem, posing a real and running threat to corporate reputation. General Motors was certainly obsessed with Nader. It hired private detectives to tap his phones, check his bins and exhaustively investigate his past. It also hired prostitutes to trap him in compromising situations (unsuccessfully). It is far too long ago for him to be accused of being a secret Muslim.
Nader sued the company for invasion of privacy and settled the case early for $425,000, a very large amount in the 1960s, equivalent to nearly $10 million today.
Nader’s lawsuit against GM was ultimately decided by the New York Court of Appeals, whose opinion in the case expanded tort law to cover “overzealous surveillance.” Nader used the proceeds from the lawsuit to start the pro-consumer Center for Study of Responsive Law and funding his own substantial additional projects. The car industry’s own goal was complete. Indeed it was a hat-trick.
Nonetheless, forty and fifty years on, companies still try to counter-spy, to uncover private facts and more about individuals who appear to display a hostile approach to them. They still try to smear those they perceive to be their enemies, and in doing so forget their lines, their responsibilities and their own stakeholders’ expectations.
I have, unhappily, witnessed a few of these operations, and none of the actions that I have observed to this effect has ever worked without some form of countervailing blow-back. Significantly none of the actions were ever taken on the basis of a management consensus; most were minority actions taken with the private approval of very senior management.
Sometimes, particularly with regard to social media, it’s best not to engage vociferous and determined opponents substantively once it becomes clear that a debate is not being offered.
But some companies get stubborn and self-righteous. They want not only to be right but they want proof and a certificate of it. Deep down, they want their critics to make public grovelling apologies, little realizing that in this there is no difference between them and their tormentors. Eventually they lose credibility with their real customers and other stakeholders by being seen to beat the same drum over and over and enter a corporate trance like an addled hippy.

However, companies need to mix circumspection with passion. They need always to be responsive. They don’t have to turn the other cheek but they should not hide and should never fail to respond with a sense of the debate as a whole and not just the last thing said.
They need also to remain genuine (as long as they had been before) and to show continued understanding of the issue or the grievance.
But really none of these things can be done if you do not demonstrate a transparent commitment to talk directly and openly with external groups and any other individuals who are taking you to task. They may not reply satisfactorily but you have done your best and you will thus impress the people and institutions watching you who really matter.
















