The BBC has reported on a breaking tax scandal in Germany with global implications that makes the current Australian Tax Office investigation into a $165m fraud look like small beer.
“An international group of bankers, lawyers and stockbrokers – reportedly with links to the City of London – appears to have fiddled the tax system, employing practices which were at best unethical, at worst illegal.
Ultimately they may have deprived the state of nearly €32bn (£28bn; $36bn).”
Investigations by German journalists suggest that, despite official warnings about these practices as far back as 1992 and testimony from five whistleblowers, these practices continued and involved 40 German banks and scores of other financial institutions globally.
Exposure came from a young administrative assistant in Germany’s central tax office. She spotted unusually large claims for rebates from a US pension fund and started digging. Despite threats she continued and now a large team is trying to recover money while prosecutors intend pursuing those involved.
Full details have yet to emerge but there seem to be some familiar themes here –
- threats to whistleblowers
- unethical behaviour in financial services
- poor risk culture
This reminds us of a 2015 joint survey of 1200 professionals in the financial services sector in the USA and UK which found that 25% would likely use non-public information to make a guaranteed $10m if there was no chance of getting arrested for insider trading.
2 Questions for your organisation’s risk culture.
When we run Risk Culture Assessments for our clients, we find consistently across all their staff that less than 50% believe that –
- their organisation has an excellent Whistleblower program in place or that
- their organisation would protect them if they became a Whistleblower
Would junior staff in your organisation believe they would have the support of senior executives to call out or investigate issues that might pose a threat to the management of risk?
If they decided to become whistleblowers would your senior executives support and protect them? Importantly, would your junior staff believe this protection would be provided?
Take our FREE test to see how your organisation scores on Risk Culture, click here.
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About the Authors
John P Dawson & Carmel McDonald are the co-owners of Dawson McDonald Consulting. They’ve been running Risk Culture Assessments since 2008 to help clients protect their organisations and build resilience. They can be reached at firstname.lastname@example.org
In 2015 they published a book BUILD Your Business. Risk Managers will also find this helpful in communicating their message effectively
To get your copy of this book, or to download a free sample chapter, click here