Part IV – Young Chartered Accountants (CAs) – Beware: The dangers of “pretending not to see”

After delivering the 18^th Nelson Mandela lecture, UN Secretary General Antonio Guterres was asked whether rich people were interested in the equitable distribution of global wealth. He said: “I do not trust necessarily the generosity of people. I trust the enlightened self-interest.”

This simple but profound message made me reflect on our profession’s current state.

Are we at a stage where we shouldn’t expect the “generosity of people” and instead “trust the enlightened self-interest?” I believe so. Why? I’ll tackle this later. Now let me talk about self-interest as it relates to young CAs.

Self-interest and young CA’s

Oftentimes, self-interest has negative connotations. It’s confused with selfishness. So, we often shy away from using self-interest as a motivator for our actions – especially on ethics and ethical conduct. Thus, our appeals on embracing these virtues become altruistic. Excluding self-interests in our approach to ethics and ethical conduct has, in my opinion, proven to be less effective. For example, regarding the Givers – those whom the creators of oppressive systems, the Takers, share the spoils with- mentioned in Part III.1, we ask them to give more. Remember, the system benefits them, and they pretend not to see its injustices. Our appeals and expectations of them appear burdensome and exhausting. We expect the Givers to give twice, once for their benefit, and then for our benefit. We need to change our approach. Maybe it’s time to appeal to our self-interests and use this approach to progress our profession. This might be for the good of our profession.  And young CAs need to be at the forefront of this new approach.

Why young CAs?  I’ve previously written that young CAs are the ones who’ve been hardest hit by the negative media reports that cast a negative spotlight on our profession. How? Young CAs are future leaders and custodians of the accountancy profession. They will inherit our profession. Most have juststarted or completed their CA journeys. The longevity and success of their careers heavily depends on the preservation of the profession’s brand and integrity. As things stand, the integrity, future relevance and sustainability appears to be threatened.

That is why I continuously address young CAs. I believe they have more to lose. And lose they will if they do not awaken their “enlightened self-interest.” Why? Because this approach could benefit them not only as individuals but can also benefit the profession as a whole. True, some of the young CAs are Givers whom the Takers have decreed that they are beneficiaries of unfair and unjust systems. They too need to be wary of the future of the profession as the example of Enron demonstrated.

Givers, unlike the Takers, should set limits – The Enron story

As mentioned in earlier articles, Takers often design systems or environments that oppress some while giving spoils to others. Takers often like to get more than they give. They know the longevity of the system they create; they can predict its demise. But they never warn anyone including the Givers. How? Let’s talk about Enron and see if we could apply the example to the accountancy profession.

In 2011, I watched a documentary titled: “The Smartest Guys in the Room.” For the accounting and the auditing profession, the aftermath of Enron had huge repercussions. Rightly so. Because some accountants, auditors, bankers were at the centre of this accounting scandal. The profession had to act, and fast. Immediately after the scandal a myriad of seminars and training sessions were held. These detailed the learnings from the scandal. Accounting, auditing, ethics, governance standards were drastically changed and updated. Off balance sheet financing was eradicated – we were made to believe.

As I watched this documentary years later, however, I couldn’t help but feel that there was one fundamental question we did not answer. What nurtures the cultures that inform these scandals?

From the published information the culture, at institutions such as Enron, is described having been driven by (1) money and greed (2) little regard for the ethics (3) fear and silencing (4) people pleasing (5) aggressive risk-taking (6) macho brotherhood (7) complex, aggressive, subjective accounting treatments and, (8) complex operating structures only understood by the “smartest.”

As I reflected on this, I thought of two things. First, this culture could not have been very welcoming to people of minority races and women. The picture of an Executive Committee that had steered the organisation into its rise and demise proved this. The committee was not diverse.  This would’ve been quite an excluding culture to most people who did not meet the criteria of being “white, male, macho.”

Second, all of the descriptors of this culture (above), were visible. Former executives and employees interviewed in the documentary remember vividly what they saw and felt. Some say that, “the former CEO, surrounded himself with people like himself.” Those people include the former CFO about whom some say: “We knew that he was a man that did not have a strong moral compass.” About the advisors and the Board of Directors, they say: “The people who were supposed to say No, did not.” About some of the analysts and reporters: “They saw that the emperor had no clothes, but this was such a powerful emperor.” Essentially, they didn’t do the one thing the Enron slogan encouraged; they didn’t Ask Why.

So, I asked myself why no one said anything. The best answer comes from a former trader – who was probably young at the time, possibly the same age as the young CAs I am addressing. He said: “I was never comfortable on the trading floor at Enron. And if I had any questions, I didn’t ask them because I didn’t want to know the answer. You know, I did not want it confirmed [that] what I suspected might be true. That what I was doing, was in fact unseemly, or was at least unethical, if not worse.” 

Having worked in a profession that trains young people from university, I will be bold and say that most young people on the trading floor at Enron highly likely felt the same way. Having audited and worked in various organisations, I will also say that most people who worked at Enron probably felt the same way. But they pretended not to see.

The documentary tried to explore this phenomenon. They asked: “Did Enron find a way to exploit the darker side of human behaviour?” I agree with the question. However, I don’t agree with their answer. I believe there was no particular “evil” that informed this inaction. They were just “cogs in the wheel” in how accepted systems work. Systems that take from others while benefitting others. I have defined the components of these systems inPart III.1 .

These people were likely the component I previously described, as secondary beneficiaries (the Givers) in these systems. Givers are people who the Takers decree should receive the bulk of the remaining benefits once the Takers have taken their share. What do they give in return? Largely fuelled by fear, they ‘pretend not to see,’ hoping that the takers will be satisfied.

Alas! Takers have an insatiable appetite for taking. So, every once in a while, their taking grows out of control and they take ALSO from the Givers to negative consequences of epic proportions. When this happens, the world scrambles for solutions. How unethical! Everyone exclaims. Various solutions are proposed and implemented. Who provides the solutions? The Takers. They redesign the system and talk about the benefits of ethical behaviour. A scenario of the Xhosa idiom where the mother crab tells her children to walk straight. We’re then back to square one. Same Takers, different Givers same results. We then start all over again. Why? Because the underlying accepted systems, cultures and acceptable behaviour are never addressed. Why? Addressing these would require the Takers to “start with the man in the mirror.” They despise the mirror, not the behaviour of the man in the mirror. So the solutions they craft are like putting the proverbial “lipstick on a pig, so to speak.” My apologies to the pig.  

Life continues. All are lulled into a false sense of comfort. The Takers are fixing things. Until Steinhoff 2017, Carillion in 2017 and Tongaat Hullet in 2019. Literature on these scandals reads like a script from the Enron book of (mis) management. Greed, charismatic leadership, insatiable appetite for risk, aggressiveness, fear and silencing of dissenting opinions. The governance structures of some of these companies unashamedly lacked transformation or diversity. The leader surrounds himself with likeminded people. Investors, advisors, employees pretend not to see or worse; they didn’t want to know the ugly truth. Oh, and regarding Steinhoff at least, there’s a hint that off-balance sheet financing might have reared its ugly head. I thought we’d dealt with that after Enron. Same script different cast.  

It is for the above reasons why I said at the beginning of this article that as the profession it was not the time to “trust necessarily the generosity of people” but rather to “trust the enlightened self-interest.” And, young CAs should be at the forefront of this approach. Why?

Young CAs, beware the dangers of pretending not to see.

So, what nurtures the cultures that inform abovementioned scandals?

I believe that these cultures, are nurtured, supported, anchored and sponsored by the Givers. Those who benefit from unjust systems. They benefit by pretending not to see until it’s too late. Until the Takers have taken EVEN from them.

Young CAs, I urge you to pay attention. Open your eyes in all environments and spaces that you exist in. Be it personal, social or workspaces. What principles underlie and inform the daily activities, accepted norms and acceptable behaviours? Are there cultures rooted in excluding / limiting / precluding others, while benefiting you? How are activities critical to the growth and development of young people allocated? Are there practices that suggest that this allocation could be unfairly influenced by race or gender? Look around your teams, who are you surrounded by? Is it only people who look like you?

Ask yourself WHY? Don’t shrug your shoulders and pretend not to see. Don’t turn a blind eye. Don’t rationalise / justify how these systems treat their intended victims. Don’t let FEAR drive you to pretend not to see.

Can you, even in your private capacity, do something to dilute the power of the Takers? Observe the lessons from the actions of the Supervisor in Part I of the series, are you able to win some private victories?  Why is this critical?

Because history has proven that the Takers’ powers, if unchecked is to your detriment. Sometimes, even more than to the “intended victims.” You ALSO stand to lose the most when the Takers taking gets out of hand. Remember, they design exclusionary systems and know their lifespans. You don’t.

Watch the documentary about Enron and perform an in-depth analysis. What happened when the ‘house of cards’ started crumbling? The Takers / Architects of the ‘house’ put their interests’ way above the interests of the Givers. They jumped the sinking ship, saving their assets, cashing in for themselves, while encouraging the Givers to continue investing. They knew the Titanic had hit the iceberg or at least was about to hit the iceberg. But, like the band conductor in the movie, they told the band to keep on playing louder. Is not what we hear about Enron similar to what we are told about Steinhoff. Are there not reports that the architect also acted in a similar manner? Didn’t he know that it was inevitable that the Titanic was about hit the iceberg?

Yes! Takers do that. After all, they’re the designers of the systems. They know the fragility of the principles their system is based on. They know that the system is unsustainable., So, they’re always on the lookout for signs of the system cracking. Then, they are the first to bail out. Leaving the Givers’ lives shattered. Most never account or take any responsibility for their actions. They continue to live their lives in absolute luxury while the Givers, with the rest of us, scrape to rebuild and survive.

Young CAs, it is in your self-interest to dilute the Takers’ power and to be bold. To no longer be a sponsor of their game. The Takers, like the rich people mentioned at the beginning of this article, are not interested in the equitable distribution of resources. They want it al. And then some.

What of our profession as a collective? Is there a room for more scrutiny of ourselves, our environments, our behaviours as we stand in front of the mirror? Are there more questions we need to ask ourselves? I believe so. In the next article I will address this idea – Are we training CAs that are ready for the finish line?