"We need to know where we've been, to know where we are going" -- so goes a quote. This is a good time to reflect upon the year that is now coming to a close. It is the right, and perhaps the duty of every Canadian citizen to participate in nation-building, and to engage in a dialogue or debate.
The year 2012 saw some scandals in Canada. There was the exposure of the multi-million dollar Ornge Air Ambulance scandal, the Canadian Food Inspection Agency scandal in Alberta, and the Robocall scandal.
There were two scandals in two Canadian universities -- an expense scandal at the University of Calgary and one false invoice scandal at York University. There was a Diabetes Registry cancellation at eHealth Ontario, and there was the F-35 scandal. Finally, we had some gruesome homicides.
Did we spend a lot of time, money, and energy investigating and analyzing these scandals? Yes. Is there a sure way to avoid these problems for the next year, 2013? Probably not. Is there a Kryptonite to reduce such scandals in the future? Maybe.
Why do financial scandals or other scandals occur, in general? There could be many reasons like negligence due to commission or omission, lack of supervision, lack of monitoring, lack of transparency, and lack of accountability.
However, there is one underlying factor that could be generally true in many scandals -- rational human beings act with a motive of greed and self-interest, and try to maximize their individual or collective gains. Irrational human beings, of course, may be acting under the influence of other factors that affect them, like substance abuse or mental illnesses.
A kid left alone in a room with a jar of cookies is likely to pocket a cookie or two without permission. A kid who has been forbidden to watch television may yield to temptation and switch on the television if he is alone at home.
An executive who feels he is she is not under observation is likely to steal as well. Here is a thought: If an executive has a cookie jar at the office and a cookie jar at home, what is the likely direction in which the transfer of cookies may take place if no one is watching? From the office jar to the jar at home, right? In most cases, the individuals are trying to gain something of value for themselves or fulfill their needs. Moreover, they are willing to take risks and pursue that value in spite of the obvious deterrents like the legal punishments and defamation if they are caught.
So who or what is to be blamed for these scandals? The person(s) involved in stealing, negligence, or crime? The work or business environment? Circumstances? Mental Health status of the persons? Behavioral problems? Drug addictions? Genetic makeup? Lack of self-control? The higher authorities and auditors, for letting such incidents happen, or for not paying enough attention?
These are tough questions, with no easy answers. Some people are good at fighting temptations, and some are not. Are the persons stealing money or committing crimes bad by nature, or simply people who could not resist the temptations to make quick and easy bucks, or indulge in a forbidden act?
Do you spank the kid who stole a cookie from the jar or simply remind the kid? Is it better to lock the cookies? What about adults involved in illegal activities? Do you increase the deterrents like punishments to avoid unwanted behavior? Or do you shame them publicly to prevent repetition of similar incidents? It is a good thing that we have an active media in Canada to expose scandals, supported by armies of independent bloggers and activists.
What can be done to prevent future scandals at Canadian organizations? Of course, we know about transparency, accountability, regular internal auditing, annual external auditing, surprise checks, and so on. However, the idea that is on top of my head is public scrutiny -- increasing the level of deterrence by high stakeholder alertness, awareness, and activity.
If stakeholders are ignorant, intimidated, or so busy with their lives that they do not pause to ask questions or challenge people in charge of financial decisions and spending, it provides opportunities for money managers to steal or people in charge to be negligent. It is important for the members of the organizations and the general public to take a greater interest in the affairs of organizations. Of course, this is common sense and stating the obvious. However, in reality, how often are the stakeholders vigilant and involved?
Here is an example: Do all of us know what FIPPA is? We are referring to the Freedom of Information and Protection of Privacy Act. Do we know how to use FIPPA and access information from public organizations? Would we be willing to utilize that right, or be intimidated to do so?
I wonder how many FIPPA applications were filed in all Canada in 2012, in total. We will know after the year is over. What would happen if that number doubled in 2013? What would happen if there was whistle-blower protection in all organizations? Would there be a reduction in scandals? Probably.
Information is power, and asymmetry of information gives the persons in charge a greater power to cheat. This power can be equalized by making the information symmetrical and open to all. Scrutiny is the Kryptonite of scandals, in the sense that a vigilant and engaged public can possibly deter potential criminals. Employed people in organizations are already lucky to be having well-paid jobs, at a time when many new graduates struggle to find employment. They have no business gambling with, or stealing taxpayer or stakeholder money.
A bottom-up approach is much-needed in all organizations in Canada. The top-down-only method of decision-making, management, or solving problems may slowly become unpopular, if not obsolete. The good news is that a social change seems to be in progress. The stakeholders are enlightened now, and smarter.
Methods of communication have improved. Group messaging and sharing activities are common. Ideas spread quickly. Good ideas spread faster. Unfortunately, this enlightenment has not always been converted into action. It is important for the people at the bottom to speak up, demand what they want and get what they deserve, instead of simply having a trickle-down system of policies and implementations.
There is a saying "Nothing changes if nothing changes". If we want 2013 to be better than 2012, changes will be necessary. That includes increasing the symmetry of information, and vigilance. Scrutiny can indeed be the Kryptonite of scandals. Happy New Year 2013!