One day, you are the CEO of one of the world’s largest banks. Next day, you’re sitting at home, nursing £20million in lost bonuses and contemplating an avalanche of lawsuits. No doubt you’re thinking: ‘What could I have done differently?’ Bob Diamond might have been able to save his skin if he could have demonstrated that there was a ‘nudge nudge’ element to his call with deputy governor of the Bank of England, Paul Tucker.
Instead, he was forced to give vague answers and accept that thanks to the international media attention, his position as CEO was no longer tenable. But the worst thing is, that crucial phone call was probably recorded, kept for the FSA-mandated six months and then deleted on grounds of space saving. That’s great from a regulatory viewpoint, but a nightmare from a business perspective.
As the person at the top, the first question Diamond should have asked himself is, if I am looking after everyone in this company, exactly who is looking after me? For anyone in business, don’t rely too heavily on your IT department for this kind of support. They’re bound to just meet with regulations and get on with the next job. 1,000 monkeys, so to speak.
All to often, this important part of the business has been at least partly outsourced, meaning that all of your exceptionally valuable e-mail and other data is not only in the hands of techies, it is probably in the hands of techies who work for another company. It could be in the ‘cloud’, which again is likely to mean a server in a remote warehouse somewhere in the US. Even if it’s in-house, IT is tightly cost-controlled. No-one likes spending money on IT anymore – especially with the tightened belts of recession - and so you end up with fragmented, half-completed systems with limited capacity.
Searching for an email from six months ago can be a challenge in itself, and at most companies, you certainly won’t find the telephone call. It cost Barclays $100 million to conduct their LIBOR investigation, to enable 22 million documents to be analysed by external counsel. Since the scandal broke and heads starting flying, the Barclays CTO has probably mulled over 20 different ways the document analysis could have been done quicker and cheaper. If the money had been spent on a reliable system upfront, rather then once the horse had bolted, that phone call may have been found and would be a key piece of evidence pertaining to the relationship between Barclays and the Bank of England.
But once you have that P45 in hand and you’ve handed back the keys to the executive jet, how exactly do you get the ammunition to defend yourself? Not only is a lot of what you say not recorded anyway, but you can suddenly find you are on the wrong side of the firewall, looking in, and you have no way of accessing the data that does exist. To put it simply, don’t fall into the same trap as Diamond.
Ensure that everything you do is recorded, be that e-mail, IM, landline and voice calls, and that you have access to a copy of it, so that if the time comes when you need to defend the company (or in the worst case, yourself), everything is quickly and simply available. They say you should never put anything in e-mail you wouldn’t want to see as tomorrow’s newspaper headlines. But if you do, having access to the ‘dossiers’ if ever you have to testify before a select committee will massively help your case.
Ben Shellie is CEO of Chaseits compliance and regulatory consultancy.