Throughout my career, I have always subscribed to adhering to a high level of ethical behaviour, and, in general, I have normally experienced a very similar concurrence with that attitude amongst my work colleagues in the vast majority of instances, and even in the few circumstances when that was not the case, any potential failures were little more than situations caused by an enthusiasm to achieve more than the reality of the moment would permit and were, therefore, readily forgivable and neither illegal nor corrupting to any extent.  I have, however, encountered two situations which required me to take prompt and decisive action to safeguard the legitimate interests of shareholders, fellow directors, employees, creditors and other third-party interests.

First Instance:

The first instance was on behalf of a company which had originally been established by a UK Government Department in partnership with two universities and with supporting finance supplied by a major UK Bank.  After a number of years, this company had successfully fulfilled its remit and, with its marketplace changing significantly, it had been decided to sell it to commercial interests.  The book-value of this company was very low since the main asset was actually the technical knowledge of the staff who had been drawn from the universities.  Ownership was then bought up at the bare book value by a foreign-based businessman and shortly thereafter, I was asked to assume a directorship to help him take the company forward.  I agreed to do this and soon was asked to attend a meeting with the Bank in question where the new owner persuaded the Bank to grant a substantial overdraft facility, well into seven figures.  

By good fortune, more than by instinct, I had already taken the precaution of inserting two experienced members of my staff to review and analyse the accounting operation (my SOP).  Within a few days, I received an urgent telephone call from one of them informing me that a major bank transaction was already in hand and that I should come in immediately to review this.  I did so, and found that, without consulting or informing any of his fellow directors, the new owner was actually arranging the transfer of the entire overdraft facility, via another bank, out of the UK to the USA and from there, on to a Swiss-based company, in complete contravention of all of the assurances and indications of his planned activities that he had provided to the Bank to obtain that facility. 

I immediately took a brief letter into that second Bank and instructed it to freeze the account, failing which action, that Bank would be held liable for any loss arising from this transaction, and, having received that Bank’s agreement to halt this transaction and freeze the funds now in its possession, I then visited solicitors to take further advice and to solidify the professional interests of the other directors and third-party interests.  The advice given was that due to the obvious criminal intentions of the action and its source, the only credible course of action was to wind that company up, and, after advising the other directors of the situation and the advice received, with their agreement, I proceeded and as a result, there is a legal precedent in my name where a single director, acting alone, was responsible for winding up a company. 

We then found that the gentleman in question was the eventual owner of the Swiss company and that, whilst he was not a UK national and from a second country, his choice of foreign residence was in a third jurisdiction which did not permit extradition, so that, had this fraudulent bank transfer been enacted, he could have left the country on the date that the transfer would have been effected had I not been warned in time.  As a result of my action, however, no crime was committed and nobody but that man in question was out of pocket. Furthermore, we were subsequently able to get the technical staff of that company development and research jobs within both of the universities from which they had originally been drawn, again at no loss to them. Similarly, no creditors were left out of pocket, and the full winding-up costs were met from the dissolution values achieved for the few remaining assets. 

Finally, since the news-media were completely uninformed of this entire matter, no party involved with this company was affected by this whole matter in terms of media reports since it was all carried out without a fuss and without complaint from any party, including the foreign-based resident who had started this whole fiasco.

Second Instance:

That first instance had happened many years ago, but the second instance is a bit more recent.

This time, it involved a Trust Operation concerned with petro-chemical prospecting and for which I had been hired to advise the Trust’s two Trustees regarding financial control and planning scenarios as that construct began to change into an incorporation.  A meeting with the Trust’s Bankers soon transpired where I accompanied the day-to-day managing Trustee to reassure the Bank that new-business development he had initiated was progressing satisfactorily and that, as a result, an improved financial situation was imminent.

Regrettably, I soon received a written instruction from that Trustee to act in a certain manner but to keep his fellow–Trustee entirely in the dark about what was happening.  Rather than speaking with me directly beforehand, he left this instruction for me by a non-reply email as he was leaving for a foreign holiday without also advising me of his contact details.  Had he made the effort to speak with me first, I would have advised him of the irregularity of his suggestion; advised him not to act in that manner since it could never be construed as legitimate; and would certainly have refused to act in that way myself. Given that his fellow-Trustee was a figure of extreme importance within the legal profession and had held high office within the UK Government, the potential damage to his reputation was, for me, a red-line beyond which I was not prepared to act.

This whole matter was additionally affected by the extra fact that a new and very key member of the development prospectus was himself, whilst working and being strategically located in a major geographic target region, his own domestic US residency had resulted in him being pressed into becoming a witness in an investigation being carried out by the US Justice Department mounted against a former employer of his, a major US oil company.  To my mind, with such large international players involved, this was hardly the time to engage in some form of clandestine activity, to keep from scrutiny, any relevant information from the eyes of the person whose very reputation was bolstering the continuity and development of the founding organisation. The fact that now, by the clear evidence of an email trail, my own name would be irrevocably linked into that scheme of which I had no prior knowledge nor part in creating, I formed the view that this certainly limited my own options and made it impossible for me not to act without delay.

I therefore met with the main Trustee at his home to inform him of what was in hand since, in any event, it was my contractual duty to report on all matters coming under my scrutiny to both Trustees.  He was both astonished at my disclosure, and upon sight of the evidence and the written instruction given to me to deliberately keep him in the dark, he immediately fired off a reprimand to his colleague.  Matters were soon thereafter regularised and I tendered my resignation from what would then have become an impossible assignment.  I was content that the Trustee I had assisted was now well-enough informed and sufficiently capable to ensure that all future management and progression of the Trust would be accomplished in a proper and fully-accountable manner both to his satisfaction and for the eventual benefit of the Trust itself and whatever organisational structure it became in due course.

Final Comments on Stewardship:

There is, to my mind, a clear and distinct difference between maintaining a confidential approach to the handling of all commercial information to prevent granting any benefit to a company's competitors and another situation whereby an individual or group within an organisation sets out to keep secret, matters which are strategic and which should, in conformity with the Laws which actually sanction the existence of that organisation, be promptly and fully disclosed to all legally appointed Officers of the organisation, such as Directors or Trustees, who ultimately, would be the persons actually held accountable at Law if any misdemeanour, illegal act or destructive loss, were to arise relating to those particular matters withheld from their scrutiny. 

Thankfully, as I stated at the outset to this section, my experience of such situations has been limited to the foregoing two instances, however, these did rather forcibly point out to me that when one signs up to assume the position of being an Officer of an Enterprise, one must always be prepared not only to oversee all commercial activities to ensure that the organisation both survives and prospers in as full a manner, legally, as is possible under all forms of market pressures, but also, when there is clear and immediate evidence that activities are occurring which are not in full conformity with that organisation's legal capacity to behave, one must be prepared to act correctly and without hesitation to safeguard all of the other Stakeholders of the business, and in particular, one's fellow Officers who could otherwise be held to be accountable for matters in which they were never correctly involved by those whose "moral compass" had suffered a malfunction and who had acted deliberately to cover up their actions. 

When one bears in mind that Directors can now be held accountable for all company debts if decisions were made at a time when it should have been obvious that the organisation was insolvent, or in situations where an employee or customer suffers injury and the management have failed to act in accordance with established health and safety procedures, it should be borne in mind that such fines and penalties can become totally destructive of the persons now forced to pay up under such circumstances.  To call such outcomes merely unfortunate would be, to my mind overlooking the fact that such circumstances would be more akin to a miscarriage of justice.  All Officers of a Company, have, as far as I am concerned, a duty of care to each other on a mutual and reciprocal basis and all are, thereby, both made safer and the organisation stronger as a result.

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