Integrity Talking Points

Must State servants be courageous?

20 January 2012

The State Services Commissioner’s code of conduct stipulates 18 standards that have universal application across the 160 or so agencies of the State Services. The standards are packaged under obligations to be fair, impartial, responsible and trustworthy. The Cabinet Manual, describing these obligations as the principles of public service, imposes them on all employees in the State sector.

Nowhere in the code is there a specific expectation that people working for government will be courageous. Many agencies have applied additional standards to their staff. A few of them refer to courage.

The behaviour of Captain Schettino in abandoning the Costa Concordia well before many of his passengers raises the question of whether he was required to show courage. Should he have stayed until the last person was evacuated, which may have meant conforming to the romantic tradition of going down with his ship? When the abandon ship order was given, did that end his employment duty to remain with the ship? Was he then, as much as any others on board, entitled to save himself?

Descriptions of leadership usually include a reference to courage. We anticipate that people in leadership positions will be explicitly courageous when needed, inspiring others to follow suit. It is a characteristic of good leaders, but is it a requirement?

The word courage is used only once in the Understanding the code of conduct – Guidance for State servants. That reference is to the professional courage involved in being honest. Is the strength of personality needed to show fortitude when evasiveness seems a reasonable course, or where deception is a less taxing option, the same as being physically courageous?

The State Services Commission competency profile for a chief executive includes courage. The requirement is that “chief executives can be counted on to step up when times are tough. They do not shirk personal responsibility.” But does this mean they can be counted on to be self sacrificing in extreme circumstances? Can moral courage be divorced from its physical aspects? How metaphorical would the expectation be that our leaders should go down with their ships?

Captain Schettino will be in the news for quite some time. His behaviour when his ship was sinking suggests that he is not a brave man. But was he required to be? Do we require our State services leaders to be brave – or only those where exposure to danger is part of their job description?

Could we ever have a need for tee shirts emblazoned “Get on board, damn it!”

www.ssc.govt.nz/node/1914

www.ssc.govt.nz/node/2124

www.thedailybeast.com/articles/2012/01/18/francesco-schettino-the-costa-concordia-s-daredevil-captain.html

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Beith Atkinson, Costa Concordia, courage, standards of integrity and conduct

January 20, 2012

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ICAC recommends keeping an eye on contractors

19 January 2012

A report released yesterday by the New South Wales Independent Commission Against Corruption (ICAC) indicates how readily some agencies’ senior managers can manipulate their agency controls to personal advantage. The Department of Education and Training engaged an IT project manager on contract (and contractors of course bring special expertise, entrepreneurship and innovation to a cautious, risk averse public sector). But he applied his innovation to manipulating recruitment and payment processes, corruptly acquiring more than A$400,000.

ICAC found that the manager engaged staff who were the employees of his private company, taking a margin of up to $57 an hour on the services of five contractors retained for ten months. He also obtained benefits by approving falsified timesheets for the contractors and payments claims by an associated company for work not performed.

Many New Zealand agencies have contractors in controlling positions, although the State Sector Act precludes them having financial authorities. The probability is that similar risks exist. Some characteristics in the Australian case reflect events at Otago DHB four years ago. That agency’s IT manager was later convicted of corruptly acquiring approximately $17 million.

ICAC recommendations include reviewing the use, qualifications, ratio and management of contractors.

The Australian case is small beer compared with fraud by top management in Chinese agencies. According to media reports, the incidence of corruption by ”top executives” is increasing although the sums involved are reducing. In just 88 publicly reported cases last year in State Owned Enterprises, an average per incident of NZ$6.5 million was taken, compared with almost NZ$12 million per incident in 2010. The largest reported sum involved the controller of a State owned furniture manufacturing business who fraudulent extracted approximately $NZ 950 million. He was sentenced to death, as were five other agency leaders. (Two corrupt officials were executed last year). Eleven others were given life sentences.

An official survey apparently found that 60% of Chinese are ‘very confident’ or ‘relatively confident’ about the Chinese Government’s anti corruption measures.

www.icac.nsw.gov.au/media-centre/media-releases/article/4011#top

http://english.cri.cn/6909/2012/01/16/2982s676375.htm

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Beith Atkinson, China, Contractor fraud, corruption, ICAC, New South Wales

January 19, 2012

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Markets and morality

18 January 2012

The “occupy” groups around the world that have replicated the Wall Street prototype are gradually dispersing. There seems to be moderate public sympathy for their message but not for the inconvenience of their occupations. In itself that may be a metaphor for our attitude to ethics. A worthy notion but its persistence can be irritating.

A Pew Research Centre survey shows that only 50% of respondents in the United States now view capitalism in a positive light, reflecting a 2% slide since 2010. Interestingly Kiwiblog yesterday sought to champion capitalism in the face of the bad rap that various distortions, of crony capitalism and the like, have created. But capitalism, which stimulates innovation and creates wealth, must have a tight relationship with ethics. Adam Smith said as much in his Theory of Moral Sentiments that preceded his Wealth of Nations. What seems to be happening in too much of the world is that practitioners of capitalism have thrown ethics out the window; too often the relationship between morals and markets is disintegrating.

A US ethicist Rushworth Kidder prosaically observed that “When those within the system let themselves imagine that markets and morals can operate independently, the raiding parties of greed and avarice swarm…through the system. To keep up, companies shift their focus from ethics to compliance. Ethics continues to recede.”

The contribution last week to the News of the World enquiry of a former editor may typify business attitudes. Kelvin McKenzie’s attitude to integrity was evident in a statement that as editor, he didn’t spend much time on ethics or privacy. His view was that most things should be published “if it sounds right, and it feels right”.

It seems self evident that behaviour that illustrates a slide in ethics will affect public confidence in business, just as unethical behaviour by officials will undermine trust in government. And the media this week have carried numerous reports of such corruption; including US Marines abusing their warrior ethic by urinating on the corpses of Taliban fighters, of 13% of British scientists admitting to firsthand knowledge of researchers deliberately falsifying data, of junior academics protecting careers rather than than reporting bogus research.

Integrity is a state of mind; it is not a set of rules.

http://pewresearch.org/pubs/1583/political-rhetoric-capitalism-socialism-militia-family-values-states-rights

www.kiwiblog.co.nz/2012/01/the_case_for_real_capitalism.html

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Am I my sister’s keeper?

17 January 2012

Trustworthiness is the essence of good government. People will trust a government that is seen to act with integrity and require integrity standards from its officials. Integrity standards involve managing conflicts of interest. At its core that involves subordinating personal interests to those of the community. States recognised for their good government, are reasonably good at entrenching a culture where agencies operate transparently and the selflessness of their staff engenders trust and confidence.

Capitalism promises economic advancement by stimulating entrepreneurship and innovation. Enterprise is rewarded. Building business is incentivised. Those incentives can encourage opportunism and cutting corners. Deals are done.

There is a widespread fudging of the interface where business people provide hospitality and gifts to officials. They do so for commercial reasons. They seek to establish a relationship with decision-makers; ie they buy attention. More blantantly they seek favourable consideration as a provider of goods or services. Of course the benefits presented to officials are almost never gifts from the donor’s taxed income, but are funded as tax deductible expenses by the business seeking a government contract. The beneficiaries too readily rationalise such gifts – they are not influenced; their independence is not swayed by an evening’s entertainment; to suggest they would be subborned is laughable. The inference is that they are different from the subjects of all research about how gifts influence our sense of obligation and reciprocity.

The State Services code of conduct seeks to minimise the fudging of that influence and hence the acceptability of gifts. The Standards that exemplify the need to be trustworthy include –

We must ensure our actions are not affected by our personal interests or relationships
We must never misuse our position for personal gain
We must decline gifts or benefits that place us under any obligation or perceived influence
We must avoid any activities, work or non-work, that may harm the reputation of our organisation or of the State Services

The effect is to prohibit activities that create a conflict of interest. The guidance is that we must always be aware of how others see things, and do nothing that advantages ourselves or those with whom we are connected. The Crown Entities Act is much more explicit about when we become interested, specifying relationships which will inevitably influence the perceptions others have of influence, even if we convince ourselves that we are not influenced.

The experience this week of the chair of the Swiss National Bank is educational. A longstanding international banker, unquestionably familiar with the integrity requirements of that profession, has had his world turned upside down because of public perceptions about his trustworthiness.

As bank chairman he was deeply involved in reducing the value of the Swiss franc against the dollar. His wife is an economist. She bought a large parcel of dollars just days before the bank intervened in the market, realising a substantial profit. Media reporting created an uproar. A politician called for his resignation. The banker refused. He claimed he knew nothing. He was not responsible for his wife’s acts. He donated the trading profit to a charity. He offered to make public all his previous currency trades… but didn’t actually do so. Despite support from fellow bankers in Europe, a press description of him as “sincere, honest, transparent and of good faith”, and a PricewaterhouseCoopers report that there was “nothing illegal” in his wife trading, the banker’s goose was cooked.

He apologised. He explained that he knew nothing until after the trade. He instructed the bank not to trade without his approval. But these fell on deaf ears. People saw a conflict. Trust had evaporated. Within a week of refusing to do so, he has resigned.

www.reuters.com/article/2012/01/09/us-switzerland-hildebrand-idUSTRE8080RK20120109

http://ssc.govt.nz/node/1914

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Beith Atkinson, conflicts of interest, standards of integrity and conduct, Swiss National Bank chair

January 17, 2012

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NY Times editorial on a Supreme Court code

12 January 2011

The comments by the United States Chief Justice in his annual report do not find favour with the New York Times. The following is extracted from last Thursday’s editorial.

“Judicial Ethics and the Supreme Court

Chief Justice John Roberts Jr. tried to address growing concerns about ethical behavior and conflicts of interest on the Supreme Court in his annual report on the federal judiciary. But he skirted the heart of the problem: the justices are the only American judges not bound by a code of ethics.

He dismissed criticism that justices are exempt from the Judicial Conference’s Code of Conduct, contending that they do “consult” the code, which “plays the same role” for the court as it does for other federal judges.

But he misstates the code’s authority. While a justice can ignore the code, all other judges must obey it. If the Supreme Court is serious about abiding by an ethics code, there are ways for it to do so without impinging on the court’s independence and its constitutional role.

…

Until the court takes these steps, there will be continuing concerns about the justices’ impartiality. It is not enough for the justices to rely on their own “constant vigilance and good judgment,” as Chief Justice Roberts contends. It is disingenuous for him to claim that “no compilation of ethical rules can guarantee integrity” when no code currently applies to the court. Adopting a conduct code would clarify the rules that apply to the justices and greatly bolster public confidence in the court.

www.nytimes.com/2012/01/06/opinion/judicial-ethics-and-the-supreme-court.html?_r=2&ref=ethics&pagewanted=print

https://integritytalkingpoints.com/2012/01/02/judging-judges-are-they-better-at-identifying-conflicts/

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January 12, 2012

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Should China make a business of fighting corruption?

11 January 2012

The Chinese President delivered his annual pep talk on the importance of fighting corruption to the Communist Party’s Central Commission for Discipline Inspection this week. He ordered a more rigorous fight against corruption and more discipline from within the Party. An interesting theme of his message was that the next generation of leaders must present to the Chinese people a Party with a “new face and new image”.

The Commission for Discipline Inspection is the Department responsible for compliance with policy by Party officials. Theoretically it merged several years ago with the agency monitoring the effectiveness of Federal, Provincial and city administrations but the special status of the Party remains.

President Hu’s concern is the plague of corruption scandals which the official Xinhua news agency acknowledges is behind growing social discontent. and could threaten the Party’s political authority.

A prominent fraudster was the Railways Minister alleged to have received more than NZ$150 million in kickbacks during construction of the high speed network. In December, a week of police action was needed to restore “order” after the public reacted against corrupt officials in a Guangdong village. This intolerance is being voiced also in a growing number of social networking sites protesting against graft, and some openly critical of the government..

President Hu spoke of the need to stick to a policy of “putting the people first” .

“The fight against corruption remains severe and the task is still arduous…We need to intensify supervision and discipline, let public supervision play a positive role and rigorously enforce the party’s rules.”

Privatising the fight may be a solution. The United States Government announced that $532 million was paid last year to whistleblowers who identified and initiated action against corrupt government contractors. The False Claims Act designed to “out” corrupt contractors in the Civil War has a new life. Health care providers and pharmaceutical companies have been the main “victims”, with more the $3 billion recovered by the Ministry of Justice in cases brought against unscrupulous contractors.

One suspects that Chinese entrepreneurship could exploit this type of process given an opportunity. In the US whistleblowers can earn bounties of up to 30% of monies recovered by the government under the False Claims Act.

http://au.news.yahoo.com/world/a/-/world/12539503/china-s-hu-orders-party-to-fight-corruption/

http://www.chicagotribune.com/news/nationworld/la-fg-china-corruption-on-wheels-20120108,0,7097465.story

www.reuters.com/article/2012/01/06/us-doj-whistleblowers-idUSTRE80528G20120106

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Beith Atkinson, China's Supervision and Inspection, corruption, whistleblower bounties

January 12, 2012

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Do freebies influence journalists?

10 January 2012

In an interesting commentary about the International Consumer Electronics Show, one of the world’s largest exhibitions, now underway in Las Vegas, a San Francisco journalist has reported on the intended purpose of the “swag” given to accredited media. This is an ethics issue as much for journalists as it would be for public servants. Last year in what he thought was a bagful of the usual PR material he found a camcorder worth hundreds of dollars. The story line is that he gave it back!

The article quotes an academic on journalists accepting freebies. This is liable to influence their perceptions and compromise their independence in the same way as gifts can affect anyone.

… “For one thing, giveaways mean they cover events they otherwise might have ignored. For another, the act of accepting a gift subtly sways their perception of products, companies and publicists, …. It’s simply harder for human beings to mercilessly slam a smart phone or a dumb CEO after readily accepting the company’s big-bowed gift basket. That, of course, is precisely why companies drop big money on such items…. Taking gifts also risks shaking the audience’s confidence in what’s written: Is the rah-rah tone rooted in fantastic products or free ones?”

The article explores whether there are declining ethics among a newer generation of IT journalists and bloggers who are frequently offered free products, see no harm in accepting them and have absolute confidence in their ability to remain independent. All of which sounds like officials worldwide who seem blinkered to the commercial purpose behind providing gifts and hospitality to opinion-setters and decision-makers.

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/03/BUCB1MKGJM.DTL&type=tec

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Beith Atkinson, ethics, gifts and benefits

January 11, 2012

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Declining workplace ethics anticipated in US

6 January 2012

The US National Business Ethics Survey results were released today. This is the seventh survey in the series. The Ethics Resource Center which conducted the survey, provided the question-set used for the New Zealand State Services Integrity Surveys in 2007 and 2010.

The NBES relates to the private sector. Reponses from officials were excluded (presumably to be included later in the National Government Ethics Survey series.) The data was gathered in September 2011 from 4,800 respondents, a third by telephone interview. (There were 8238 responses to the 2010 State Services Integrity Survey.)

The findings show stronger trends since 2009 than the comparable 2007 and 2010 State Services Integrity Surveys. A rebound in ethical work behaviour is identified although the report describes a “bificated” pattern unlike previous surveys. In effect there is pressure on standards caused by the economic situation, but the employment implications of misconduct constrain “bad actors”.

The survey explores increasing discussion about business practices in social media and organisational reactions to this form of whistleblowing. These areas of concern did not feature in the New Zealand survey.

There are a number of factors that the 2011 NBES has in common with the 2010 NZ survey.

Where direct comparisons can be made, the same types of misconduct remain most prevalent;

Abusive and intimidating behaviour US 21% NZ 38%
Lying to employees US 20% NZ 20%
Improper use of internet / email US 16% NZ 24%

Respondents regard this type of misconduct as less serious and are less inclined to report it, than behaviour of a more criminal nature, but which is seen less frequently, such as;

Theft US 12% NZ 4%
Sexual harassment US 11% NZ 5%
Inappropriate payments, perks, gifts US 4% NZ 4%

A particular concern reported by the Ethics Resource Center is that ethical cultures are not strengthening. “The way things are done around here” is not improving, with 7% more employees saying that their business has a weak ethical culture. This is shown also by;

a 7% increase ( to 22% ) in employees who reported misconduct then experienced retaliation
a 5 increase ( to 13% ) in employees reporting a perceived pressure to compromise standards in order to do their jobs.

The concern is that as the US economy gets better, and companies and their employees become more optimistc about their financial futures, misconduct will rise.

http://blogs.wsj.com/corruption-currents/2012/01/05/survey-sees-less-misconduct-but-more-reporting-and-retaliation/

www.ethics.org/nbes/files/FinalNBES-web.pdf

www.ssc.govt.nz/sites/all/files/Integrity-and-Conduct-Survey-2010-full-report.pdf

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Beith Atkinson, NBES 2011, State Services integrity survey

January 6, 2012

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US business ethics survey published tomorrow

5 January 2012

Tomorrow the findings will be published of the biennial US National Business Ethics Survey of data collated last year. The question set used in that survey has been the basis for the New Zealand State Services integrity surveys carried out in 2007 and 2010. The trends evident in the United States between 2009 and 2011 will be interesting when compared with the New Zealand trends. There were few significant changes observed here in the frequency and nature of misconduct, either for good or for bad!

In Niger however things don’t seem to be getting any better. A commitment to attack fraud in government has burned out! The Ministry of Justice building in the capital, holding the offices and the records of fraud investigators, was set alight yesterday by unidentified arsonists! According to the media, numerous judges and senior officials were under investigation.

West Africa scores very poorly on the Transparency International Corruption Perceptions Index.

Niger in 134th place, was scored with 2.5 out of 10.

Nigeria at 143rd place, scored 2.4.

Ghana at 69th is the region’s “leader” with a score of 3.9

China scored 3.6.

( New Zealand, rated as having the least corrupt public sector, scored 9.5 )

www.news24.com/Africa/News/Nigers-anti-corruption-files-burn-20120103

http://cpi.transparency.org/cpi2011/results/

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January 5, 2012

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Integrity Talking Points

Must State servants be courageous?

ICAC recommends keeping an eye on contractors

Markets and morality

Am I my sister’s keeper?

NY Times editorial on a Supreme Court code

Should China make a business of fighting corruption?

Do freebies influence journalists?

Declining workplace ethics anticipated in US

US business ethics survey published tomorrow

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