This week we have witnessed the corrosive consequences of culture, ethics and corporate governance being allowed to take a back seat at the expense of personal gain and corporate profit. The Group Chairman and Chief Executive at Barclays have paid the price but so have millions of innocent investors who have seen a fall in the value of their pensions.
It is now clear that Barclays told lies to manipulate the rate at which banks lend to one another and also leaked privileged LIBOR (interest rate) submissions internally so that their traders could profit by engaging in what was essentially insider trading.
In effect, telling lies and breaching confidentiality had been allowed to become behavioural norms within parts of the organisation. At the same time, policies were clearly in place describing the standards of conduct and ethical behaviour espoused by Barclays.
Just take a look at the 2011 annual report in which the then Group Chairman Marcus Agius says “The fundamental purpose of any company is the creation and delivery of long-term sustainable shareholder value in a manner consistent with its obligations as a responsible corporate citizen, and corporate governance must be seen in this context”.
The Chief Executive, Bob Diamond, goes on to say that “Banks need to become better citizens. This is not about philanthropy – it’s about delivering real commercial benefits in a way that also creates value for society”.
When things are going well, it’s tempting to turn a blind eye or deprecate the soft areas of an organisation such as culture and ethics. The lessons from all of this will not be fully known until the Government enquiry into the affair has been completed.
In the shorter term many organisations would do well to take corporate governance more seriously by investing in culture and leadership to avoid haemorrhaging costs and shareholder value.