At times you will hear a household staffer or neighborhood security guard being berated “why didn’t you tell me?” in response to some blue-collar crime that has taken place.
Since greed is often a motivator behind such crimes societies have over centuries tried to build frameworks to combat conventional crime. Citizens are taught to immediately report anything suspicious – unattended bags, strange behaviors, abuse within homes. And over time, alert citizenship has become a critical part of law enforcement.
Unfortunately in the post-modern world, greed became something of a virtue (remember Gordon Gekko’s famous words in the classic movie Wall Street “Greed is Good”) and seeped into corporate management models.
When greed is the overriding motive then the ancient clarion call of conquest -- “rape, plunder and loot” - reinvents itself as “continually exceeding shareholder expectations”. As the world wakes up to the hugely dangerous ramifications of white-collar crime – greed resulting in trillion dollar financial crises has become the single biggest detriment to achievement of the United Nation’s Millennium Development Goals – the question that needs to be asked is: why are so many employees missing in action?
In Indonesia, despite all the anti-corruption legislation there remain well publicized cases of corruption in state utilities, regulators and private sector entities. Despite strict environment laws, companies engaged in the resources sector (both mineral and agricultural) routinely run foul of environmental NGOs and often there is literally a fire behind the haze.
Despite human rights and anti-discriminatory laws there remain violations of minimum wage payments, employment of underage children, unhealthy working conditions and religious and ethnic discrimination in recruitment. Despite industry specific laws – e.g. chemical pollution and discharge, health, safety and accident prevention or zoning, some companies are seen to routinely circumvent these.
Despite food safety laws, an unconscionable usage of hazardous materials is taking place as some companies seem to care less about consumer health (including infants) than boosting margins by cutting raw material costs.
The person who coined the acronym “KKN” standing for the triple evils of corruption, collusion and nepotism got the sequence right. There can be no corruption or corporate crime without collusion.
And collusion can be both direct (employees being a part of the dubious coterie actually committing the crime) and indirect (employees who are aware but look the other way and pretend to ignore the problem).
In Indonesia, the problem of the latter (the aware but silent majority) is just as serious as the former. So why do so many employees – especially at the middle levels – keep quiet and indirectly collude with the perpetrators. There are three main reasons for this.
First, the country’s record in tackling white-collar crime overall has been poor and inconsistent – from the Bank Indonesia liquidity support scandal that cost taxpayers more than US$60 billion, to the prosecution of environmental crimes to breaking urban planning and zoning laws that have pushed Jakarta to the brink of becoming a gridlocked nightmare. Governance markers cannot be set unless accountability is seen to be enforced.
If white-collar crime has no consequence or it can be “managed” then creating a culture of business ethics, responsible conduct, compliance or corporate sustainability becomes an isolated not an industry-wide phenomenon.
Second, many managements don’t emphasize to employees their responsibility in reporting corporate malpractices. The “I am personally principled – what the company does is beyond my control” disconnect and confusion is prevalent in many employees.
You are not principled if you are a bystander in a company discharging dangerous pollutants in a nearby body of water or cooking financial accounts and business plans aimed at hoodwinking bankers and investors. In the world of conventional crime such individuals would be labeled “accessories” and prosecuted for indirectly colluding or failing to report.
According to Marie Chene of Transparency International employees have the best access to information on illegal or unethical practice and are usually the first to recognize the wrong things. The overarching goal of “whistle blowing” legislation is to provide employees with a safe alternative to silence and to empower employees to report wrongdoing by providing adequate legal protection.
The International Labor Organization defines whistle blowing as “reporting by employees of illegal, irregular, dangerous or unethical practices by employers” and urges companies to develop, disseminate information on and most importantly enforce such legislation. The provisions of the UK Public Interest Disclosure Act of 1998 would be a good one to emulate in emerging markets.
In the absence of legal protection and emphasis by companies to mandate and recognize employees who report corporate malpractice, there is a dangerous mix of fear, silence, pretense and a distorted self-justification. There is also a strange and illogical understanding of “harmony preservation.” If “don’t rock the social boat” does not apply to conventional crime why should it apply to white-collar crime? Has the Bank Century scandal created harmony or huge disharmony in Indonesia? Those in the bank and Bank Indonesia who turned a blind eye in the interest of harmony are also culpable, like the perpetrators for a costly nine-month distraction that has plagued the government.
Finally, it is also an issue of corporate leadership. A good CEO or director must have his or her “ear to the ground” and be accessible to employees for raising “warning signs” without fear. In the context of a wider democracy, usage of social networks and investigative journalism opening up these channels is also critical for managing corporate and brand reputation. But what happens if the top team is itself indulging in “KKN”? Well, you are probably working for a company that resembles The Firm. This weekend rent that DVD and, like Tom Cruise’s character, prepare to take a stance.
The author is CEO of the international strategic consulting company IndonesiaWISE that also specializes in governance. Insight appears on the second Wednesday of each month.
