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More laws, a rush to regulations, ever more complex.
That's the wonderful thing about progress and instability,
it creates anxiety and anxiety creates regulation. It's great.
And this is being driven by emotion
like most laws are. Get some headline,
'You've got to do something!' A new law is passed,
compliance is tightened, a regulatory framework is strengthened,
rarely do we see deregulation simplify things for very long before
something else happens,
and the environment is a jolly good example of that. Just think of the
environmental regulations,
I have, a number of my clients, they're some of the largest industrial companies in the
world,
and up to 80 percent of their turnover is driven by one word:
compliance. By people like you who are advising
them, and their clients, and their clients clients, that in order to comply,
emission legislation is coming in. They need to do this, that, and the other,
they need these kind of technologies, and away we go.
Regulations, let's look at the size of this: I mean this is, this is
climate litigation filings over time, just look.
From 1989 through to 2010
it's a whole new business. So, there are all kinds of opportunities for us.
But finally, here's a thought: I'm talking about corporate law now
And many of my friends who are
corporate lawyers and they interface with commercial lawyers
looking for advice have come to recognise that actually,
compliance is dead. That compliance
is okay, but it
only keeps you out of jail, it doesn't
do anything for the brand. Let me give you an example:
up until fairly recently, about 15 years ago,
in many EU countries it was perfectly permissible
for a multinational company to go and pay a bribe in order to build an HQ.
So long as you didn't pay the bribe inside the EU
that is. If you paid the bribe to a Moscow Mayor, for example
in order to get the permission to build your banking
HQ, you could claim that as the tax-deductible expense
and the more you bribed under EU law, the more money you got back from an EU
government.
Now it wasn't the case for all EU governments, but for quite a few.
So you can imagine a Newsnight programme
tomorrow night, in which the Chairman of one of the leading European banks
is being quizzed by Jeremy Paxman.
And he says, 'So did you or did you not
in your junior capacity, see this email dated 1997?'
And he says 'I've never, I've never disputed that I saw the email.'
'But this email says, it authorises, specifically authorised
two payments of 10 million dollars in order that you could build your HQ in
Moscow.'
He says, ' Well I didn't sign the authorisation.' 'Yes, but you saw the email
did you not?' 'Yes I saw the email, but I would like to point out that whatever we
did was 100 percent compliant
at the time.' 'Yes,
what you mean is it was legal, so you wouldn't go to prison
then, but you would go to prison now, correct?'
say, 'Well yes.' 'Which is why
we have changed our directions to all of our staff and we say that you can no longer do
these kinds of things.'
'Ah yes, but Patrick, pause for a moment here,
I thought there was something to do with personal morality here.
Isn't it about doing the right thing? Are you saying that it was right
then, or wrong then? Is it right or wrong now?' 'Well no, no! You shouldn't do that!'
'But was it wrong then? You said it was legal but it was wrong.
Is that what you're telling me?' 'Well, yes.'
'So you, your fingerprints were all over something,
that was perfectly legal at the time, but was morally wicked,
is that what you're telling me? Do you have any morals Patrick?
Or are you just determined by the compliance department of your bank?
Because if that is the case, heaven help us, and you no longer
are fit for purpose, I think you should resign don't you?'
You can see what a mess he's in, can't you?
He won't go to prison, you've protected him from that,
but will he work again in banking?
Will he ever work again anywhere? His reputation is
trashed. He's been portrayed as an
amoral monster. By perfectly complying with every regulation that has come out
in every twelve month period.
So that is why I say, from the bottom of my heart,
and I don't care who you're advising, that if you're looking to future
if you're looking to provide true insight rather than just information and advice,
then the insight would be, 'Look, my friend, I'm going to tell you the truth. I'm gonna
give you the advice that all the other compliance departments will give you
across the world.
And then I'm going to tell you why it's wrong. Because that advice will keep you
out of prison if that is your object,
but it will trash your brand, it will destroy your organisation,
and you could land up as an absolute prior
in the whole of the society in which you are currently respected
as a hero. It's your choice of
course
but I wouldn't touch that contract with a bargepole. And the reason why I wouldn't
touch it
is because the future will not be driven by compliance, to be driven by the most
important work in the future which
is 'emotion'. And emotions are a cruel thing.
You'll be judged tomorrow, by tomorrow's emotions
by the passions of the public in 2015 or even 2025.
And you'll be judged ruthlessly, not by whether you complied,
not by whether you were quote, 'honest' but simply by whether
you did, what by the future standards
with morally the right thing. So what we have to do,
is 'future emotion'. We have to decide where we think public opinion may go
in the light of some future scandal. And I think and I think you agree with me,
that the legislation is likely to progress in this particular direction
We need to be ahead of compliance. Compliance is the absolute baseline
and if we actually want to win trust for your company,
while the other companies are kicking and screaming about being dragged into
the Third Millennium
regarding their, whatever, standards. I think you should say this:
'We think these regulations are rather good. In fact we've been following them
voluntarily for the last decade.
In fact, we've been advising the government. In fact, we wrote the regulations.'
'I don't know why they're whimpering and screaming about this kind of stuff.
It's important to do what is morally right and these regulations enshine
that in British law.'
And the moment they do that, they've taken your advice and your insight,
they've built their brand, they've created law and so they've been driven
by it
and they're in a very different place.