Honesty Matters

The Tesco debacle is another reminder that a lack of honesty and integrity in business matters can have catastrophic effects. Before we start pointing the finger, however, it would be wise to reflect for a moment. The presentation of financial information can be complicated. That is why we have Accounting Standards to guide us — and even accountants have been known to disagree how information should be presented in particular instances. The first question we need to ask, therefore, is, was this a deliberate fudge? So far, the evidence suggests that it was. The next question is, why? Why should a leading retailer need or want to suggest it was doing better than it actually was?

We all know about Tesco’s decline, the profits warnings, the changes in management at the top, and so on and so forth. But it is difficult not to see the attempt to massage Tesco’s profitability by £250million as an attempt to bamboozle investors and protect the interests of some senior management. Someone, somewhere must have decided that they could ‘get away with it’. That is not a very noble way of thinking, nor was the action taken very noble. The consequences are already plain to see: the movement in the stock price has hit both private and corporate investors, may have placed the jobs of Tesco staff in jeopardy and will have a detrimental effect on suppliers, too, if, as seems likely, Tesco goes into further decline.

What interests me, however, is not the mechanics, so to say, but the morality. What is the point at which not revealing everything, a perfectly legitimate and indeed necessary business practice, passes into failure to disclose and an attempt to mislead? What kind of mind can justify that sort of behaviour? Is it merely greed or fear masquerading under the guise of  business acumen or financial astuteness? To lie, to deceive, is not an accidental act. It is not a mere ‘mistake’. We cannot separate public and private morality so completely that we can be honest and upright in our private lives and distinctly dodgy in our public lives. That is why revelations of misconduct in the public sphere are so disturbing. They reinforce the sense that no one is to be trusted; and without trust, society falls apart. There can be no fudging the fact that honesty matters.

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3 thoughts on “Honesty Matters”

  1. So true. Obviously the Tesco story is one that will become clear as the investigation proceeds, but as I have never liked Tesco as a Business, there local aggression and marketing strategies, built on their former success is something that I don’t agree with, and I never darken their doors.

    What their situation does is exactly as you have said, it betrays trust in their corporate morality, as did the expenses scandal in Parliament a couple of years ago and no doubt other scandals in public life over the last few years.

    The government and politicians in general accuse the public of a level of cynicism about them, but who can blame us if their own actions have led us to a position where we believe that the whole institution of government is inherently dishonest.

    The recent Scottish referendum highlights for me the issues that face us now. The three main party leaders have made promises to the Scottish electorate about an increase in the powers of the devolved government there, including many of which are currently within the prerogative powers of the Westminster Parliament. These promises were made completely without any consultation with parliament as a whole, and many MP’s now feel betrayed themselves by their own leaders.

    It looks increasingly likely to me that the party leaders are now backing away from the comprehensive promises made, as they understand the wider implications of those promises and the aspirations that they raise among tax payers in England, Wales and Northern Ireland for similar devolved powers, and the way in which it will affect their power base within each country if they give the public all that they now feel entitled too.

    Decisions made in haste and panic at a possible break up of the Union, now seem tawdry and political expediency, rather than good, sound, considered government for the greater good. Political cynicism at it’s worst. Making me as an individual, less trusting of politicians as a group, and wondering why I should waste my time participating in politics, when those choosing to govern us make such poor decisions.

    A constitutional crisis is brewing, which will take up much government time, to the detriment of other work, which is urgently needed and will now have to wait or not be done at all.

  2. What I find almost as bad as the original dishonesty, is the apparent willingness of some companies and people to employ people to high positions who were shown beyond reasonable doubt of dishonesty. That should call into doubt the morals of their new employer.

    I do not suggest we should not forgive but neither should we forget. Such people should not be reemployed to positions where there might be the same temptation.

  3. When companies do this it’s usually to protect the interests of a group of people who are socially connected. It gives them time to sell their stocks, which then ultimately brings about the inevitable crash or loss of confidence. By this time people have not noticed that the investors have acted on a pre-warning and the crash normally appears to be connected to other issues, such as ailing sales. These are men who hold themselves upright and are held up as upright citizens and men of integrity, some who are in key positions in Government, NHS, industry and so on. Not exclusive behaviour to men, but on the whole it is.

    Often it’s the confidence level on the stock market which turns around sales, as it’s easier to encourage investors and access to banking loans.

    An investigation might (probably will) reveal that a certain group of people leapt out of the market just before the crash. However, proving that they pressured someone to hold back or manipulate information to give them time before a Stock freeze becomes difficult if that group have power and influence over others, especially the Police or in the courts. Whilst we know someone should never be above the law, there is a lot of corruption, manipulation, back scratching and so forth among some ungodly people.

    The fall guy in all of this will be the one who prepared the figures, regardless of whether they were pressured into doing it or not. The senior managers will saunter away into positions in other Super Markets. What’s unusual in TESCO’s case, is that it seems some have been caught out by the man they themselves have brought in, who seems to have taken them by surprise. How does Mr Lewis even begin to unravel the complexities and results of years of unhealthy practices? He is promising us honesty, integrity and transparency, but maybe he’s got some well practised people to deal with who are not going to relinquish their accumulated wealth and power easily.

    One of the biggest problems any growing firm faces is the continual pressure to grow and grow profits, often driven by the stock market and young graduates who are called into board rooms to demonstrate how the company is growing. It’s obvious that no company can sustain this forever and people are going to get hurt along the way. Old fashioned family firms grew to a certain size and then maintained their livings by serving their communities with graft and a need for integrity, we have lost that on the whole.

    Conniving and scheming in particular social circles has become so normal that ‘doing a favour’ for someone else is given approval and a jolly pat on the back. And if anyone dares to challenge it as morally wrong, they get ridiculed, ostracised and sometimes even threatened, so the behaviour goes unchecked.

    My prayers are with all those people who have families to feed and who depend on their wages from TESCO. It seems unfair that they may have to suffer because of what’s going on.

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