What Ever Happened to Accountability?

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.”  ~Henry Ford, founder of the Ford Motor Company.

I am trying to figure out why people in the UK and US are so angry with their government.  Well, one reason is the awful financial mess (e.g., national debt).  But I sense an even deeper anger and distrust.  To me, not being able to trust one’s own leaders is the ultimate in disenfranchisement and the precursor to far worse things to come.

I believe this mistrust of government comes from the apparent (real?) double standard in relation to how laws and criminal activities are prosecuted. If one group is given special (lenient) treatment, because of their status or wealth, while the majority are prosecuted to the letter of the law, then it is easy to see how mistrust can arise.

Here’s a perfect case in point. Recently, HSBC Bank was fined $1.9 billion for criminal offences involving illegally laundering drug money through their banks.

According to an official government statement: “HSBC is being held accountable for stunning failures of oversight — and worse — that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries,” Lanny A. Breuer, the head of the Justice Department’s criminal division, said in a statement.

A large monetary fine, as you would expect.  But it seems to many that this is criminal activity, considering it went on for over 5 years.  Not just a one-off accidental slip-up. And most criminals wind up, if found guilty, in prison doing time. However, at a recent news conference in Brooklyn, Mr. Breuer defended the decision to opt for a settlement (monetary fine), rather than seeking an indictment against the bank, calling the $1.9 bn fine “a very just, very real and very powerful result.”

Okay, to most of us on the street a $ 1.9 billion fine is hugely significant.  But I don’t think it even makes a dent in the coffers of HSBC, which reported a $21.9 bn profit in 2011.  As one commentator stated, this is simply a “rap on the knuckles” for HSBC.

The good news?  HSCB apologised. “We accept responsibility for our past mistakes,” Stuart Gulliver, the chief executive of HSBC, said in a statement. “We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes.”

So, what if the average company or small business were caught laundering drug money and terrorist money? Would they just get a fine and then be allowed to go back to business as usual?  Not!  Most US states put people convicted of writing a “bad check” (having Non-Sufficient Funds to cover the check = forgery) in prison for months to years. But laundering hundreds of millions for terrorists and drug lords and all they get is a monetary fine?

I was trolling through the internet blog traffic on this incident and came upon this quote.  I think it is a fair and honest expression of the average citizen (the majority): “If the people who run these banks are never going to be properly investigated and, where necessary, prosecuted for criminal negligence, then what is going to stop all this happening again and again? At the very least these bankers should lose their jobs, their huge pensions and be banned for life from working in the financial sector.”

There are the rights of leadership, and there should also be the responsibilities. Accountability is a two-way street!

What do you think?

John R Childress

john@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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One Response to What Ever Happened to Accountability?

  1. Part of the problem is that the regulators eventually take jobs in the banks and then move back to head the regulatory agency. In this way the banks ‘capture’ the regulators.

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