LIBOR scandal highlights the perils of living in the bubble

By guest blogger Kaitlin Walsh


I don't know whether, how or by whom Barclay's was advised in what's now being billed as 'banking's tobacco moment'. But I do know that it appears that lack of objective 'outsider' advice over how to handle the LIBOR scandal has both compounded negative fallout and provided a(nother) scary confirmation of how far off course an entire industry can steer when it loses sight of accepted moral touchstones.

As the tentacles of the LIBOR scandal multiply and creep ever outward to implicate a growing number of major financial institutions worldwide, there's a lot to be learned from some media coverage of the event.

In some reports, the focus is not so much on the innate perfidy of the offence itself, but Barclay's (and the regulator's) failure to anticipate the outraged public response to exposure of its illegal activities.

In these stories, the attention has been very much on the bank's responses to being sprung, rather than the moral dimensions and practical fallout of the rate fixing itself. The behaviour of the bank has been described in terms such as 'mis-steps' and 'being caught flat-footed', because neither it nor the UK regulator, the Financial Standards Authority (FSA), were 'banking on the furore' that would ensue. Both were guilty of 'badly underestimating public opinion'.

Other reports chew closer to the moral bone. 'The Economist's' headline from 7 July, 'The rotten heart of finance', pretty much says it all. In this piece, the sheer 'everydayness' of the recalcitrant bankers' behaviour is highlighted. The fact that those involved appeared so cavalier about their own wrongdoing is chillingly reminiscent of analyses of some of the worst of human behaviour, what we might term 'the banality of evil', the phrase coined so famously by Hannah Arendt in her observations of Adolf Eichmann's trial.

'The Economist' piece goes on to look at the cultural and other issues which contribute to illegal and unethical behaviour becoming, by all accounts, normalised. Small wonder then that transgressors lost sight of the way their actions would be construed by 'outsiders'.

No matter which slant on the events speaks more loudly to you, a common thread emerges. And that is that, living in their 'bubble', the key players became cut off from basic ethical, legal and moral touchstones. They were either wrapped up so completely in a toxic culture that they cared not about their own wrongdoing, or miscalculated so completely the magnitude of their crimes that they were caught unawares by the outcry when they were exposed.

Whether their moral compasses became warped by self-interest, desensitized by over-exposure, corrupted by arrogance, distorted by a misguided sense of 'right-doing', thrown awry by peer pressure - or all of the above, is a question for others to answer (or at any rate, for a different blog).

But one thing that was clearly lacking here and could have made a real difference - if not to the behaviour itself, then to the subsequent 'mis-steps' in owning up to it - was objective outside advice. Akin to a giant magnetic pole, the right advice can unfailingly indicate where the 'due north' of acceptable legal (at the very least), ethical and moral conduct lies. This in turn can better prepare one for owning up and ultimately, one hopes, making amends.

Because the fact is, even for those with the best of intentions there's real danger in making judgements using only the sounding board of one's own peers. Consulting only those whose interests are closely aligned with your own is a great way to get the answers you want. It's also a great way of cementing yourself into a giant, artificial bubble which, when it bursts - as bubbles do - is likely to create one giant hell of a mess.

The morals of the story are many. But I am highlighting just one. If in doubt, don't close ranks. Instead, throw open the doors to objective counsel and trusted 'outsiders' who can provide fresh perspectives. At best, they can help you stay a 'due north' course. Should the worst happen, they can help you minimise the mess.

Sniff the 'Rotten heart of finance' at http://www.economist.com/node/21558281

Mis-step with Barclays and the FSA at
http://online.wsj.com/article/SB10001424052702303612804577528852646272314.html?mod=wsj_share_tweet'

Become an instant LIBOR savant at www.accountingdegree.net/numbers/libor.php


Kaitlin Walsh is BlueChip Communication's Director of Client Strategy & Content

News...morally bankrupt or giving us what we want?

How quickly, fueled by genuinee public outrage, and years of restrained bile, media can turn.

In this case, on itself.

It raises a bigger question than the obvious one of media ethics.

There's a very good reason for the media furore. And it's not phone tapping.

News of the World, and possibly other News Limited titles, intervening in the private lives of grieving people was simply the thread that unravelled the whole ball of yarn...and led to this particular tangle.

The British public are rightly outraged at the notion of media, or anyone, inserting themselves into the investigation of a child's death - and them profiting from such morally bankrupt activity.

But really haven't the media just been giving us what we, the avaricious public, been consuming on demand and gravitating towards by reading ever more salacious details of other people's lives? I'm thinking maybe the whole ball of yarn here has as much to do with media consumers as media malpractice.

There is no justification in my mind for the actions of media party to this behaviour.

But where's the line? And what part do we, the public, play?

I'm speaking here as a media consumer, not as a PR person. As a PR person I tend to think decent journalists have a hard time of it as they set out to do a very worthy job. As a PR person I also strongly believe both media and PRs should work in ethics-driven cultures, and be under scrutiny - nothing beats sunlight to help encourage good behaviour.

Possibly since journalism (and PR) began we've all been reading, hearing and watching and probably will continue to, news that's delivered via foul means as well as fair.

It's just that rarely do we lift the bonnet to see how the engine runs. Because all we care about is whether or not the car gets us from point A to point B in the style we want to travel.

High brow economics commentary? Page three girls? Perhaps a dodgy used car sales person running from the cameras? Or perhaps your taste runs more to celebrity weight loss/infidelity/surgery stories. Or to civilian deaths in another country's conflict.

We've all become, to some extent, voyeurs entertained or informed at some cost to others - whether that cost is their dignity, their safety or simply their right to suffer unseen.

I have no moral ground to stand on here. I read newspapers, listen to radio, read online news and occasionally read 'one of those' magazines while waiting for something better to happen or avoiding my email.

That makes me too complicit in the decline of media standards. Some media would argue that my profession does also...but that's a debate for another day.

If one lasting and fundamental good could come from this 'you wouldn't read about it' saga, it may simply be this: that media are more accountable.

For the most part the many journalists I've worked with, sometimes at cross purposes to, and alongside, are exceptional people.

For often average incomes they work, day after day, to report news that people should know. That's news that is in the public interest. It's news that holds people, governments and businesses accountable. And it's news that sometimes changes the world.

For that ridiculously important task many get little more than a byline or story credit. Very often the money and professional opportunity doesn't adequately cover the grief that goes withnthe job. There is however, for those journalists, the great satisfaction of knowing they really did make a difference.

It's just a shame that media organisations, guided by the scandal and sauce-loving public, have increasingly rewarded another kind of journalist and photographer - and apparently private eye.

That's the kind who really does only care about money and ego.

But they will, sadly, continue to be rewarded by the average reader. Because actually, until now, we really didn't want to think too hard about where our 'news' was coming from or how it was sourced.

In my private nirvana, news consumers and those who serve them, would actually want to know about the kind of ethics and behaviour that generated the headlines.

It's happened with clothing, chocolate and coffee. Maybe one day we'll read news that comes with a "free trade" or "ethical" label. If no-ones rights were infringed, it's okay to read. If so, straight to the bin.

Yes, that's fantasy land. Because media, and many others do believe the means justifies the ends.

But should we all be a bit more careful about that kind of thinking?

Sometimes nothing justifies the ends. Sometimes the means in itself is so wrong that it represents the slippery slide to an ethical wilderness. Once lost, we might never emerge to see the greater good, or innthis case, the public interest.

Ethics in PR (now stop laughing!)

Today the Public Relations Institute of Australia sent out a link to the PRTV edition about ethics.

It's easy to laugh when the concepts are linked - "PR" and 'ethics'.

My second, more sombre reaction (as when interviewed) is that ethical behaviour by PR people is impossible if they don't really know what they're communicating about.

How do I know? Let's call it bitter experience...stories for another time.

The short version is that as so-called professional communicators we have zero credibility if we don't really know what we're talking about, trust the people we work for and ultimately, take extreme care in how we present facts AND nuance.

Yes, we should follow a code of ethics.

Yes, we should "do the right thing", meaning be honest and truthful.

More than those things we should question whether or not what we're asked is right.

And ultimately satisfy ourselves with an answer we can live with.

I certainly can't claim the moral high ground - as a younger PR I sometimes felt very uncomfortable with the "party line". It's career threatening to say "Excuse me Chairman, are you entirely sure we should present things as you've just described?".

More recently we've walked away from several potentially great (exciting, newsworthy) jobs when we felt unsure of the merits of our client's story, or just had a feeling that 'something wasn't right'.

This is not an argument that PRs need forensic accounting skills. However it is reasonable to expect that senior people in our profession can read both people and data, pay attention to the P&L and do a little due diligence on potential clients and employers.

Long term, if we believe our own mantra, our personal reputation is our most valuable asset.

Perhaps in PR the universal ethical guideline is simply enlightened self-interest.