Protected: PMB Presentation in .pdf format 17th March 2015

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Who’s next?

In the past few days, it has emerged that Oxford University Press has paid £1.9 Million  to the Serious Fraud Office after admitting that two of their overseas subsidiary companies had obtained sales in Kenya and Tanzania by paying bribes.  They have also offered to donate £2 Million to charities in Africa and pay a $1/2 Million dollar fine to the World Bank.  Like Macmillan, the issue emerged as a result of action taken by the World Bank, to fight bribery in some of the more corrupt markets in which they operate; in addition to the fines imposed, OUP will not be able to pitch for World Bank funded business for a three year period.  OUP has also said that it will take disciplinary action against the individuals concerned.

From a publishing perspective, this is starting to pose interesting questions about whether any UK companies will continue to provide text books for African schools.  Following Macmillan’s run-in with the World Bank, it is widely understood that they have significantly scaled back their operations in Central Africa, and other major players in the market are known to have closed down their operations in some of the riskier countries in the region.  Bribery is wrong, but the companies concerned are, in spite of their corrupt activities, suppliers of high-quality materials to the school books market in Africa and the operators that move in to fill the vacuum created are, by and large, less likely to provide books of a similar quality although there are some honourable exceptions to this rule, some of whom have already taken pre-emptive steps to prevent corrupt activities by their employees.

But I digress.  Once again, the SFO has demonstrated its preference for negotiated settlements over prosecutions of offending companies, using a carrot and stick approach.  This is inevitable, given their limited resources.  However, one should not underestimate the nuisance value, even with a negotiated settlement like this.  OUP will no doubt have incurred significant costs in retaining legal and forensic advisors to conduct an internal investigation, and I suspect that they will be paying for the services of a highly-qualified and expensive individual to monitor their behaviour over the next few years, as a condition of the agreement.

However, the question that is lodged firmly in my mind is still the one posed by my headline:  “Who’s next”?  One of the lessons that I have learned after many years in business is that, when Government investigators of any hue discover issues within a  particular industry, they tend to investigate other companies in the sector, on the basis that they are likely to be doing the same thing.  When I first worked in Publishing, as a callow youth, the Inland Revenue (as it was then) had just discovered that a particular company was allowing its sales reps to sell their sample books to bookshops, when they were finished with them, and pocket the proceeds.  It goes without saying that no tax or NI was paid on this money, and the amounts concerned were significant.  Within 18 months, every major publisher had received a PAYE inspection, and the first question they were asked was “Do your reps sell their samples to bookshops”?  It was a nice little earner for the Inland Revenue.

I suspect that we will now see a similar pattern in connection with bribery amongst publishers who operate in some high risk markets, particularly in Central Africa.  There are several big name UK companies operating in the area and – as I have already mentioned – some strategic withdrawals have recently taken place.  My guess is that further investigations are going on, not necessarily in cahoots with the World Bank, and that more settlements will follow.

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Cross-Cultural Business

As someone who worked alongside the talented team at Nature  for many years, I have always tended to regard “culture” as something that lurks in a petri dish or alternatively – as many HR Professionals will tell you – the values, behaviours and ethos that make up an organisation.  However, in the wider world, “culture” is a word that denotes the combination of racial, national, moral and other factors that go together to create the unique identities of different nations.

The reason that this is on my mind at the moment is because I was at a meeting organised by my local Chamber of Commerce , where the guest speaker gave a fascinating presentation about cross-cultural businesses, and how behaviour and expectations can be influenced by the background from which people come.  Having worked in a multi-national group of companies for many years this did not exactly come as a suprise to me, but it got me thinking about my own rather lazy assumptions on the subject of national stereotypes.

The speaker, Doctor Nigel Paterson, is a proponent of the theories of Richard Lewis , who has spent much of his career studying the subject, and developing mechanisms to neutralise the difficulties inherent in people of different cultures working together.  It would take quite a long time to explain his theories, but in essence he identifies three main Cultural categories, the characteristics that they each possess, and a series of “rules” for approaching and doing business with each category.  Of course, it’s not quite as simple as that, and many nationalities are a mixture of types but – fascinatingly – this mixture can often make for the most successful nations, and individuals who possess this cultural “mix” within themselves generally make excellent business people and are the most effective managers of multicultural workforces.

I am a natural sceptic, and – like Herman Goering – mention of the word “culture” in any of its various definitions, makes me reach for my revolver, but I have to confess to being intrigued by the work of Richard Lewis, and I commend it to anybody who is faced with the challenge of a multicultural workforce, whether within a world-wide company or just here in the UK.  I am going to be looking at it   more closely myself, and I am sure it will have a bearing on how I deal with cross-cultural businesses in future.

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Graduate recruitment – more candidates required

According to the Association of Graduate Recruiters, over 30% of companies failed to recruit the number of graduates that they wanted to, last year.  This may sound ludicrous, in the middle of the biggest world economic crisis for 70 years, but a closer look at the detail provides some explanation as to the reasons for this.

A normal Graduate Recruitment scheme seeks to find and employ high-potential individuals who can be fast-tracked to senior positions within a company, to the benefit of both parties.  It’s clear, from the report, that although there are many graduates – and lots of them are unable to find a job – the calibre of applications received by companies is often mediocre, and candidates are not presenting themselves as well as they might.  Those candidates who are impressing potential employers are often able to consider several job offers, and chose the one that most appeals to them, leading to even greater problems for employers who thought that they had filled their graduate recruitment quota, only to find their chosen candidates deserting them for a better offer.

Even in recessionary times, there are only limited numbers of high calibre candidates out there, and companies need to reach out to them, making sure that they are seen as an employer of choice amongst graduates and those that advise them.  Sometimes it’s a question of offering more money than your competitors, but many highly motivated graduates are looking for more than just money.  This is by no means scientific, but I reckon that things such as job satisfaction, career progression prospects, congeniality of colleagues, ethical products and acceptable work-life balance are all key factors when a new or recent graduate is deciding whether or not to accept a job offer.  Employers need to ask themselves how highly they score in these areas.

For graduates who are wondering how to maximise their chances of getting recruited, I’d suggest that, as the report also concludes, each application has to be as good as it can be, so sending out hundreds of ill-prepared applications in the hope of getting a result from one of them is a pointless process.  Research each company thoroughly, target the strengths that you will bring to them, and to the job that they are advertising, and above all, make sure that there are no stupid mistakes in your application.  One way in which I used to sift mountains of applications for a graduate scheme was to reject anyone who had mis-spelled the name of the company.  This may sound churlish, but I was recruiting for a Publisher, and most candidates stressed the fact that they had a meticulous eye for detail…….

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Christmas in the Workhouse

I had intended to write a blog warning everyone about the perils of the Christmas Period but it’s too late now, really.  So, from an HR perspective, I hope that your Christmas party passed off without any sexual harassment claims, that nobody sustained an industrial injury as a result of loose decorations landing on their heads, that your Maintenance Man/Woman didn’t get electrocuted whilst putting up the Christmas lights and that some of your staff are still managing to struggle into work and perform their duties in spite of hangovers, and dyspepsia from eating too much turkey.

From an Anti-Bribery perspective I trust that you all have your gifts and entertainment registers in place, to record any suspicious instances of generosity on the part of your suppliers to you, or your employees to others. Just a reminder that “I thought that the dozen cases of Chateau Lafite I received last week came from Santa Claus” probably won’t be a convincing argument to put to the authorities when they start asking awkward questions and that taking a Norwegian Government Official to the Turks and Caicos Islands to discuss fish sales probably won’t be regarded as reasonable entertainment.

I trust that you will all have a prosperous and trouble free 2012, untroubled by Employment Tribunals and/or the SFO.  However, if you are faced with either of the above, you know where to come for help, don’t you?

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What’s your perception of corruption?

Transparency International have just published the 2011 Corruption Perceptions Index, their annual appraisal of the relative levels of public sector corruption worldwide.  I won’t pretend that there are any huge surprises in the results but it will be interesting to see – after the introduction of the Bribery Act – whether or not the UK can improve its position in 2012, from a frankly mediocre 16 this year, into the Top 10 countries alongside New Zealand, Singapore and a number of European nations.

One interesting thing that sticks out is the number of Scandinavian countries that occupy high positions – Denmark, Finland, Sweden and Norway all rank highly in the table and (though they’re not really Scandinavian) the Netherlands are only a little way behind.  It’s interesting to speculate as to why this may be, since they are all famously liberal  societies where things are often run with a light, permissive touch. However, they are also countries where Public Servants are regarded with respect, and rewarded accordingly. In addition, they are societies where the trappings of wealth are not necessarily regarded in the same way as they are in places like the US or the UK, so maybe there is less pressure on bureaucrats to get money by fair means or foul.  I haven’t reached this conclusion by any particularly scientific means, so it’s probably complete rubbish, but it is food for thought, maybe?

Singapore also maintains a high placing in the hierarchy – partly because their public servants are esteemed and well paid, but also because the prospect of  being flogged for the slightest misdemeanour tends to concentrate the mind.   As someone who is not a great enthusiast for bringing back corporal punishment, I’m inclined to think that living in a regime of fear is too high a price to pay for living in a state free of corruption.

At the other end of the table are another set of predictable names – many counties such as Somalia and Afghanistan, where the rule of law doesn’t always hold sway, and many more blighted by poverty, particularly in Central Africa.  It’s interesting to see that, although still far from perfect, some of the World’s emerging economies such as India and Brazil are making a little headway.  Recent events in India have shown that when the population is subjected to institutional corruption on a grand scale, the advent of increased prosperity brings less tolerance of corruption, and more calls for action to be taken.  There’s a long way to go for these and many other countries but any sign of progress is encouraging.

As for the UK ….. well; BAe are in the spotlight again, and there is speculation that the SFO are close to making a decision about whether or not to launch a formal criminal investigation into allegations of bribery by GPT Special Project Management.  Not quite there yet, are we?

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Alstom – a double whammy

Reports in the papers today tell us that Alstom, a French-owned engineering group, have been fined £27 million by the Swiss authorities in order to settle a bribery investigation against them.  This is embarrassing enough on its own, but there’s a sting in the tail, which is well expressed in this quote from The Daily Telegraph:

the SFO is understood to be looking for a significantly higher settlement as the bribes are alleged to have been co-ordinated from the UK

Three British Alstom executives (one of whom has subsequently died) were arrested and bailed in March 2010, over suspicions that the UK arm of Alstom had organised bribes of approximately £80 million in order to win overseas contracts and it’s clear that the SFO regard Alstom as constituting legitimate prey, in spite of what has happened in Switzerland, and will continue to pursue their investigations.  A quote from the SFO, indicating that it is always open to “sensible and constructive proposals” for a settlement, indicates either that Alstom are planning to tough it out in court, or that they are in negotiations with the authorities but haven’t reached an agreement yet.  Multinational companies should take heed of this, and consider the possibility that one high-profile investigation could lead to others, from other jurisdictions.  There’s a tendency to think that the example of BAe – where the UK and US authorities worked together to reach a settlement with the company – will be replicated in other such cases.  The Alstom scenario clearly indicates that several governments may want a bite of the cherry, and that it might be premature to heave a sigh of relief when you settle in one territory.

All of this is a bit embarrassing for Alstom.  If you visit their UK website, you are greeted with links to “Clean power solutions” and a lengthy section on Corporate Social Responsibility although, tellingly, a link to further information about their code of ethics was returning “page not found” this morning.   In time-honoured fashion, it appears that the bribes were paid via intermediaries who received large success fees, big chunks of which were then passed on as bribes to secure contracts.  Alstom’s spin on the story breaking today is that the instances of bribery that have got them into trouble in Switzerland are isolated events and that the company is not institutionally corrupt. I do wonder, nevertheless, how a company – even a large international group – can spend £80 million on bribes without someone noticing it.  Hopefully we will hear more about this story in due course.

Meanwhile, Down Under, the authorities are launching a consultation on whether or not to make facilitation payments illegal.  At present, Australian law allows such payments to be made where: (a) the payment was of a small value; (b) it was made to expedite a routine official process of a minor nature and (c) a record was made of the transaction.  In many ways this is a sensible and pragmatic approach to the situation, but – to return to a particular bee in my personal bonnet – it makes for an uneven playing field when the law in the UK specifically and totally bans such payments.  There will be no chance of stamping out petty corruption until all governments take a consistent approach to this problem, so let’s hope that the Australian Government does the right thing, and that it acts as a stimulus to other countries, including the US, who allow facilitation payments under certain circumstances.

Is that a pig that I can see, gracefully gliding past the window?

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