The KPMG/Carillion scandal is not simply another example of corporate corruption. This scandal also sheds light on the shaky ground juniors tread with pressures to perform, impress, or simply do their job in following orders from further up the hierarchy.
In the KPMG/Carillion case, a junior accountant at KPMG was given various instructions by more senior members of the team, which included falsifying minutes from a meeting and tampering with document dates. It was claimed that this was to mislead inspectors looking into the Carillion audit in 2018. These acts should have been recognised by the junior as ‘red flags’ which he should have questioned. The query for the Financial Reporting Council concerned how much blame should rest on the shoulders of an inexperienced junior following the orders of a superior. Outrage ensued given the junior was facing a four-year exclusion from the profession and a £50,000 fine, which was deemed inconceivably harsh for a 25 year old trainee on a £25,000 salary at the time. He just managed to escape the fine and career ban and instead received a severe reprimand.
This is not to absolve the individual of responsibility entirely, as a level of independent judgment and integrity is always going to be necessary. There is an extent to which juniors must also be responsible for actions they take. For example, if there is pressure for a property to be given a certain valuation in order to secure a bank loan, whilst it may be challenging to harness competing external demands, it is unlikely that a regulator, employment tribunal or other court would look too favourably on any juniors involved in exaggerating or distorting those valuations. After all, there is a level of independent judgment expected of professionals, however inexperienced. Especially in more explicit or obviously unscrupulous requests, juniors should at least be capable of reporting red flags, raising grievances if need be or even whistleblowing against seniors whose behaviour may amount to misconduct.
Spotting red flags
Meanwhile, it is in the less obvious situations, where red flags may be more challenging for juniors to spot, which call for more support. Money-laundering is one example, particularly in the property sphere, where fears of being unintentionally drawn into criminal behaviour keep employees’ eyes open to something they may inevitably fail to see. Ultimately, it is about trying to spot the red flags in the initial stages of a transaction. Similarly, juniors across the property sector may feel terrified by the prospect of being drawn into a malpractice that may have been out of their control to begin with, due to inexperience. For example, it may be difficult to call out a conflict of interest, such as a dual agency, or an agent receiving commissions from a third party to the ultimate disadvantage of a buyer or seller, particularly if someone is a small cog in the wheel of a complex transaction. Employers must be careful to ensure that there is adequate supervision – not simply training – especially in an industry where juniors often learn the most ‘on-the-job’ rather than through theoretical teaching. It is in practice that mistakes or oversights are made, so it is imperative that there are structures in place for juniors to raise concerns and escalate matters, where appropriate, to ensure that there is accountability. Some employers have a ‘speak up’ anonymous tool on their intranet, for example, which provides the necessary communication channels for all employees, wherever they sit in the company hierarchy, to query concerning behaviour or decision-making.
Grievance procedures
Employers have a duty to implement procedures that fairly and effectively investigate grievances raised by employees. This includes, where possible, ensuring that there are independent investigators (although this may be more difficult in smaller estate agencies or conveyancing firms). The Advisory, Conciliation and Arbitration Service (ACAS) code does not specify whom should investigate a grievance. This will depend on how serious or complex a particular grievance may be. There are a variety of helpful questions that the ACAS investigations guide sets out for employers to consider when deciding whom to appoint as an investigator. Evidence gathering, questioning witnesses, holding meetings, allowing employees the statutory rights to be accompanied at a grievance hearing and appeal the outcome of any decision are all important parts of ensuring that employees are protected and respected in their work environment. This should foster better communication and clamp down on reckless or unreasonable behaviour. If juniors are not given sufficient credence when grievances are raised – or they do not have the confidence to consider raising a grievance in the first place, even on an informal basis – it is much easier to become trapped in the line of subordination.
Whistleblowing
Employers should also be wary of whistleblowing claims. Whistleblowing policies are a helpful thing when it comes to establishing an employer’s stance – in theory at least. In practice, employers need to be receptive and responsive to those who wish to make protected disclosures and position themselves far away from the prospect of victimising employees who dare to speak out against potential malpractice. This is not just because it is unlawful; or because of the headache of dealing with an automatically unfair dismissal (if the principle reason for a dismissal is that an employee made a protected disclosure); but for wider commercial reasons too. Whistleblowing protection can reduce reputational damage, protect staff morale and assist with internal risk control. Not to mention avoiding the unwelcome fees and frustration that would inevitably come with litigation.
Impact of remote working
Now is an opportune time for employers to review their policies and procedures in this regard – not merely to ensure that formal disciplinary and grievance procedures are in place, but that adequate supervision and a clear chain of command are established. With recent major developments in the employment landscape to one of increasingly flexible/home/hybrid working arrangements, it is unfortunately much easier for matters to slip under the radar. Are trainees, juniors or newly qualified individuals not just sufficiently trained and monitored in the performance of their roles, but equipped with enough avenues of support to act independently and question superiors, should the need arise? If instructions to juniors go unobserved, then similar ones to those of the KPMG scandal may also be followed by juniors who are either too inexperienced to spot the red flags in the first place, or too unsupported to act effectively in response to them. Such individuals who are already beset by pressures to impress, retain their hard-achieved jobs and climb the career ladder may find themselves booted off it completely if they fail to grasp the balance between following instructions and challenging matters that don’t seem right.
Ultimately, this isn’t just about placing the main weight of risk on the shoulders of experienced senior staff or allowing juniors free rein to make continuous, damaging mistakes. It is about cultivating a supportive workplace that prevents corruptive behaviour, assists juniors to gain independence and experience and ultimately become an asset to a business.
Key points
- There must be adequate supervision of juniors. Providing training is insufficient in itself if juniors are not guided to spot red flags that may be less obvious in practice.
- Clear chains of command should be in place for juniors to know whom they can report to.
- Company cultures must be supportive of juniors asking questions and challenging superiors.
- More proactivity is required to ensure adequate supervision in an increasingly flexible/remote work culture, through which matters may slip off the radar.