Public Relations. Implicit in that term are two relationships not just one. The public’s relationship to you, and your relationship to the public. Although the meanings are joined at the hip that doesn’t mean one of them can’t be the antithesis of the other simultaneously. Nor does it mean that if you do X here…Y will result there. It’s not a zero sum game. They’re not locked in any correlated fashion. There can also be exponential adverse or favorable reactions to each other irregardless of making any sense. That’s why what you say, when you say, and how you say it the first time you look into a camera, write an op-ed, or even argue with your spouse matters. Only seizing the moral high ground immediately will help protect you when the pikes and torches are being gathered. It might not be enough, but it’s the only salvo that has the best chance of providing any salvation. Whether it’s for the public itself, or your own dignity, knowing what you said was truth in the end might be all you’ll have.You must to be able to look yourself in the mirror first warts and all and say, “I’m telling the truth” regardless if anyone believes you. If not, no matter how much make up one puts on eventually the truth will see daylight. Or worse you’ll be grilled by so many, for so long, no amount of special effects will be of help. Metaphorically speaking customers leaving you never to return is really not that different from an angry mob picketing your doors. Both produce the same results.
We were treated once again in only a few weeks of the first example that I talked about transpiring at JP Morgan and their CEO to another banking scandal which affects not just losses by clients or share holders, but affects… wait for it…$800 TRILLION dollars in markets linked to LIBOR (London Interbank Offered Rate.) This time the CEO is Bob Diamond formerly of Barclay’s Bank. Once again another of the worlds largest and highly regarded financial institution is caught in a scandal. Just amazing what we are witnessing today in history. Two scandals of importance, two CEO’s being rocked by what, how, when or if they knew something. Public Relation classes be damned, this real world example is staggering in the lessons being presented. And I suggest any aspiring or current CEO should be paying very close attention.
Over the holiday while we were all grilling, the CEO of Barclay’s was being “grilled” before England’s parliamentary oversight committee which for all intents and purposes functions like our House or Senate committees. What was asked and the responses to them from my point of view showed a CEO that was not only out of touch with the real world, but once again never noticed his hot air was more inline with toxic fumes. I personally watched the entire 3 hours live. My jaw still hasn’t fully recovered from the fall to the floor. So without any further ado let’s examine what transpired while remembering most if not all accusations are just that. Accusations.
To give context to anyone not familiar with the complexities or importance of LIBOR and why this scandal is so egregious is that trillions upon trillions of dollars in markets worldwide even as small a market as you and me are affected by this rate from credit cards to money markets, and willful manipulation of this rate is not just frowned upon but it’s criminal by law.
The questions being fired by the members at Mr. Diamond were truly spectacular in their frankness. There was no place to run for cover. The more Mr. Diamond tried to state how badly he felt, or mad he was, and the myriad of other defenses he tried to use, the more it showed just how foolish his reasoning was and became clearer with every statement in my view.
This is the tone of the questions and statements put forth and how the former CEO answered: (I’m paraphrasing)
It was stated many times that traders whom influenced the rates were shouting openly across the trading room floor where they needed the rate to be set. A clearly illegal request, and not only no attempt of concealing the illegal requests but where the culture regarded it as “business as usual.” So much so that former employees working at other institutions would routinely call looking for favorable manipulations to their rates. The response? “When we were made aware of the activity we took action immediately.” Yes they did, but you mean to tell me or anyone else you never knew about a purely illegal activity operating in full view for years till someone enlightened you by way of legal charges? Sure they did, can I have 2 unicorns with that line also? I mean really. What about the people whom didn’t partake in any of this purely illegal activity. In all the years this was taking place nobody ever once said to management anywhere at any time, “Hey, I’m being asked to do stuff that’s purely illegal, and I don’t want to lose my job because of it.” Ever? The logic in that alone impels one to extrapolate everyone knew that was the culture and must be acceptable to management. If not, someone willfully conspired to conceal illegal activity from management. But if it happened blatantly in the open as reported for years. The latter seems moot.
Another statement was poised to highlight even more holes in the CEO’s defense of “He was unaware.” Many prominent economist were writing time and time again for years in the prominent financial publications throughout the banking industry that it was becoming apparent the LIBOR rates were being manipulated. And the CEO of one of the largest institutions in the world that helps set these rates said “I never read about or heard about it.” That alone makes the argument for one of three possibilities. As the member said “Then you’re either, complacent, negligent, or simply incompetent as CEO.” I couldn’t have said it better myself. I’ll bet dollars to doughnuts anyone at the top of their profession knows what’s being written about and within its own industry. To say they don’t would be foolish at best.
Mr. Diamond was asked along the lines: “Did you ever question why your LIBOR rating was consistently the highest rate? Ever?” The answer: No.
I need you to ask yourself this question. If you sold anything, and I mean anything. Even if you weren’t the CEO or owner of the company. If LIBOR (or anything for that matter) was an integral part of your business model, would you never question why your price was higher than your competitors. Ever? Neither could I. And yet a CEO of one of the world’s premier institutions says he didn’t. All with a straight face. All I’ll say is what I wrote above…”Then you’re either, complacent, negligent, or simply incompetent as CEO.” Need one say more?
So here’s what I would have written for Mr. Diamond’s first public statement. If he couldn’t read it verbatim I would have declined any further involvement, because in this situation a truthful, forceful statement leaving all possible innuendos closed is all that had the possibility of saving face or reputation. Anything short and I would have suggested to say nothing if at all possible. The more he tried to mount a defense, the more he appeared to be defending the indefensible. I believe the following would have had a chance:
Every trader engaged in LIBOR understands the basics of what is and what is not legal and their duty and relationship to honor it as an employee of Barclay’s. These aren’t legal or moral questions that requires anyone with little more than common sense to figure out regardless of their legal or criminal ramifications. Anyone whom took it upon themselves or conspired with others to circumvent the system of rules held by the government and or Barclay’s should be brought on legal charges if applicable. And if not legally applicable should be fired immediately in disgrace from Barclay’s for willful incredulous actions unacceptable to the standards held at Barclay’s. Any supervisors with knowledge of what was reported as taking place at our LIBOR office and turned their backs in willful denial should also be jettison. I am saddened by my own leadership skills that for any reason someone would interpret my unknowing as some form of passive agreement that such behavior was not only acceptable but part of the structure or culture at Barclay’s. This is appalling to me. To think that anyone working at Barclay’s could ever interpret this as a form of management’s complicity can and only be a failure on my part as CEO, no one else. For that I have nothing but deep regret and sorrow. Stating to the board that I was unaware of these actions although true, never the less is not a defense to stay on as CEO. I have since tendered my resignation with deep apology to the board and Barclay’s as a whole. I have forfeited any further compensation until the board can review this matter and will live by the rulings of the board as they see fit. Barclay’s deserves better. I have made myself available to the CFTC to open any and all doors as to get to the bottom of this matter. The reputation of Barclay’s as one of the world’s premier bank being at risk because of the actions of a few is unforgivable in my eyes. What I am confident of is this; In any and all investigations it will be found I like many others were unaware. Yet that is not an excuse, only a statement for factual record. Any and all those responsible in this activity should be prosecuted if findings prove that is the proper course of action. I’ll be happy to take your questions.
At least from that standpoint the moral arguments are not only answered, but you have the ability to honestly state you’ve addressed the very same questions the pitchfork crowd wants answered. Anything less, and you might as well say nothing.
Best way to not dig a deeper hole, is to stop digging.
© 2012 Mark St.Cyr