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80 Leadership & Management corporate whistle-blower stories. One of the most famous was the Hoffman La Roche case. The company is the world’s largest producer of bulk vitamins for the pharmaceutical, human nutrition and animal nutrition sectors. In 1973, senior executive Stanley Adams discovered documents which suggested that the company was engaging in price-fixing activities to artificially inflate the price of vitamins. He passed the documents to the competition commission of the European Economic Community (EEC) in the knowledge that Switzerland – while not part of the EEC – had a freetrade agreement with it. The EEC failed to keep his name confidential during its investigation, passing documents containing Adams’ name to Hoffman La Roche. Adams was arrested and charged with industrial espionage and theft, and his wife committed suicide when she was told that he faced a 20-year jail term. In the end, Adams served six months in a Swiss prison. Adams later attempted to recover compensation from both the Swiss government and the European Union. In 1985, the European Union agreed to pay Adams £200,000 – about 40% of his total costs. The story of General Motors (GM) in 2003, meanwhile, has echoes of today’s Volkswagen crisis. Courtland Kelley, head of GM’s inspection and quality division, reported faults to management in the Chevrolet Cavalier and Cobalt. The cars had faulty ignition switches, which cut power in moving cars and were eventually linked to a number of fatal crashes. As his reports were ignored, Kelley brought an action against the company. US law allows a private individual or “whistle-blower” with knowledge of past or present fraud committed against the federal government to bring suit on its behalf. This suit was unsuccessful and Kelley was forced out of the company. In May 2014, the company was fined $35 million for failing to recall cars with faulty ignition switches for a decade, despite knowing there was a problem with the switches. Thirteen deaths were attributed to the faulty switches during the time the company failed to recall the cars. A corporate earthquake Undercover news gathering, even by one’s own customers or employees, has become easy with the rise of the smartphone. Of course, most wellrun entities with strong corporate governance codes and a culture of doing things right have little to fear. They know and manage the risks to their reputations; they have crisis management plans; their ethos protects them; in their corporate DNA, people know instinctively what will pass and what will not. But if you don’t fall into this category and the whistle is blown, you face a sudden and immediate crisis. It is a corporate earthquake, a test of leadership like no other. It can start with a leak and finish in the High Court or, tragically, with loss of life. All the experts in the world will advise that it is easier to prevent a crisis than to handle one. Do no harm and you won’t have to worry about whistle-blowing. In other words, run a good ship. The corporate governance industry has taken off with this laudable ambition and people are making a good living lecturing on corporate ethics. But as financier Paul Coulson said at a recent Institute of Directors’ event, corporate governance is also good common sense. Whistle-blowing is not the only threat; at least those allegations have to be true. We live in an age of soundbite reporting and blogging, with unverified stories posturing as news on social media. In addition to the normal corporate vulnerabilities for which enterprises have planned responses and action plans (or should have), we now have unprecedented risks from inside information, secrets and wrongdoing – be that through whistle-blowers, data breaches, leaks, hacking or carelessness. Enterprises need to be very assured in their handling of the fallout; their mistakes, thanks to Google, will stay with them forever. In terms of crisis prevention, some wise chief executives now have corporate counsellors, a trusted senior independent person to whom they turn and who acts as their independent conscience before they make a decision to go down a particular path. Their lawyer is not always the one they ask – a decision can be legal but might not be moral or ethical or might not withstand the test of public interest or scrutiny. Some wise chief executives now have corporate counsellors, a trusted senior independent person to whom they turn and who acts as their independent conscience before they make a decision to go down a particular path. The road to rehabilitation Some people survived the recent earthquake in Italy by crawling under the bed. That is not a corporate strategic option when a crisis happens. Nor, of course, is recklessly going out in the storm to shout at the gods. Enterprises who deal well with these kinds of issues often come out stronger in the end. Corporate therapy requires honesty and communication as a prelude to full recovery; a lot of work goes into containing the damage, stabilising the situation, restoring normality (maybe even a new normality) as soon as possible and then dealing with the process of repair and rehabilitation which is so often necessary. And in the end, if the enterprise has survived, it can learn the lessons. Sometimes, tragically, the whistle-blower by that stage can often be left alone, whistling in the wind. ITA GIBNEY Ita Gibney is Executive Chairman at Gibney Communications. ACCOUNTANCY IRELAND APRIL 2017
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VOLUME 49 NUMBER 2 APRIL 2017 Diver
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Comment 3 President’s comment Apr
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Contents 5 Spotlight 30 Pay gap, or
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News 7 Enhancing audit quality anch
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Est 1887 News 9 UCD and PwC promote
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When you fly Aer Lingus, you‘re c
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Annual Dinner 13 Gillian Doherty, C
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Comment 15 Brian Keegan An uncharit
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Comment 17 Write it down Des Peelo
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Comment 19 Emotion: the spoiler Ann
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Interview 21 Serving the public goo
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Retirement Planning... You have lot
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Diversity 25 Diversity... is it goo
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Diversity 27 fact that diversity an
Page 29 and 30: LONGBOAT ANALYTICS WINNER FINANCIAL
Page 31 and 32: Diversity 31 than half agreed that
Page 33 and 34: Mandatory Electronic Filing is fast
Page 35 and 36: Diversity 35 We’ve heard the soun
Page 37 and 38: Diversity 37 The road to inclusion
Page 39 and 40: Diversity 39 Sponsorships Organisat
Page 41 and 42: Diversity 41 Thoughts on diversity.
Page 43 and 44: Audit 43 insights for stakeholders
Page 45 and 46: TALK TO TOMORROW’S ACCOUNTANTS TO
Page 47 and 48: Financial Reporting 47 financial re
Page 49 and 50: LEADING PROFESSIONAL PUBLISHING
Page 51 and 52: Restructuring Trends 51 The 2016 re
Page 53 and 54: Restructuring Trends 53 insolvency
Page 55 and 56: Audit Quality 55 should be written
Page 57 and 58: Tax 57 BRASS TAX Current developmen
Page 59 and 60: Tax 59 entrepreneurial and favourin
Page 61 and 62: Tax 61 Furthermore there was no rea
Page 63 and 64: Tax 63 Tax deadlines David Fennell
Page 65 and 66: Professional Standards 65 Consent O
Page 67 and 68: Win a two-night stay at Clontarf Ca
Page 69 and 70: Membership 69 Quigley, Keith Rice,
Page 71 and 72: Innovation 71 The strategy of innov
Page 73 and 74: Innovation 73 Graph 1: Title TBD Wh
Page 75 and 76: Leadership & Management 75 UK acade
Page 77 and 78: Corporate Governance 77 Figure 1: P
Page 79: Leadership & Management 79 Whistlin
Page 83: Commercial Feature 83 the high leve
Page 86 and 87: I trusted my future to Barden So sh
Page 88 and 89: 88 Careers keystrokes and create ju
Page 90 and 91: 90 Careers The hard case for soft s
Page 92 and 93: 92 Careers job can add an entirely
Page 94 and 95: THE SPECIALIST GOVERNANCE RECRUITME
Page 96 and 97: EXCELLENCE IN FINANCIAL RECRUITMENT
Page 98 and 99: 98 Member Profile A new orbit From
Page 100: NETWORK Building a strong network i
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