Breaching The Walls of The Bunker

Executives around the world believe that it takes companies slightly more than three years to recover from a crisis that damages their reputation.

That at least is the conclusion drawn from to market research carried out by Burson-Marsteller.

The research is based on the opinions of 685 business "influentials" - CEOs, senior executives, financial analysts, business media and government officials in 65 countries.

It shows that quickly disclosing the details of a scandal or corporate misstep should be management's top priority, as it begins the process of restoring corporate reputation.

The latest research conducted by the firm took a closer look at the crisis
management strategies that a company should use to protect, manage and build its reputation.

According to the market research, the top ten crisis management turnaround strategies are:

-Quickly disclose details of the scandal/misstep (69%)
-Make progress/recovery visible (59%)
-Analyse what went wrong (58%)
-Improve governance structure (38%)
-Make CEO and leadership accessible to the media (34%)
-Fire employees involved in the problem (32%)
-Commit to high corporate citizenship standards (23%)
-Carefully review ethics policies (19%)
-Hire an outside auditor for internal audits (18%)
-Issue an apology from the CEO (18%)

Deborah Bowker, chair of Burson-Marsteller's U.S. Corporate/Financial Practice said:

"A crisis can have a devastating impact on a company's reputation in terms of its profitability, credibility, competitive position, and ability to retain and attract top performers.

However, companies can lessen their recovery time and be welcomed back into the fold, with their reputation restored, if they follow a few well executed and integrated turnaround strategies."

Bearing in mind the long list of recent disasters that the ICAEW have inflicted on the membership, and the brand value, of the ICAEW; including, but not limited to, the following:

• The failed merger


• The unseemly public row with ICAS over the name


• Poaching members from other bodies


• Using the services of Media Strategy, a PR company that breached the Code of Practice of the Association of Professional Political Consultants


• Postponing the new exam syllabus until 2007


• Not introducing and ethics paper until 2007


• The Durgan Debacle


• The failure to publish the results of the investigation into the Durgan Debacle


• The failure to conduct an independent review/investigation into the causes of the Durgan Debacle

Do you not think that the ICAEW should take heed of the above advice from Burson-Marsteller?

I certainly do!

The question is, are the ICAEW open to advice from outside the Moorgate Place bunker?

Report

So when are the ICAEW going to share with the membership the report into the Durgan Debacle (ie the report on the failures of the tendering process)?

Seems that I was right about the timing of Anstee's resignation announcement, being used to draw attention away from the internal control failings in the ICAEW bunker.

Anstee Steps Down

Even the most glittering and majestic of reigns must come to an end.

The above sentiment will doubtless be disseminated by the ICAEW executive as they seek to put a positive spin on the departure "leaked" yesterday, and due to be formally announced today, of Eric Anstee the first ever CEO of the ICAEW.

Anstee presided over the latest (sixth in 35 years) failed merger attempt of the Institute of Chartered Accountants in England and Wales. The timing of the announcement is hardly propitious, coming as it does in the middle of the ICAEW Council Conference which is trying to clear up the mess resulting from the Durgan Debacle.

I do not intend to dwell on Anstee's triumphs and failures; nor indeed do I intend to worry about whether he resigned, retired or was sacked.

However, I would note that Anstee, earlier this year, indicated that he would be in favour of trying to place a merger vote before the membership again. It will be interesting to see if his departure marks the death knell for any future foolish time consuming and money wasting merger attempts.

It should not be forgotten that the last attempt cost us £1.4M, plus untold damage to our brand value.

The departure of Anstee does not let the ICAEW off the hook, with regard to its operations and structure:

• Council needs to be cut from its current absurd level of 90 plus, to a more manageable and effective size of around 6-12 people



• The questions raised earlier on this site, in relation to the Durgan Debacle need to be addressed openly



• The selection of the next CEO will be "interesting", both in terms of who applies and who is finally selected by the ICAEW



• It should also be noted that Anstee intends to stay on his role, until a successor is found. It will be interesting to see if any new "initiatives" are announced during this period

Finally, as a minor matter of curiosity, it would be interesting to know how/why the story about Anstee leaving was leaked a day early and by whom. It is worth noting that the "leak" was well timed enough to enable Accountancy Age to put together several reports on the matter, in time for publication early this morning.

It should also be noted, that the timing and professionalism (Accountancy Age were well primed with several articles and a podcast-which would have taken 24 hours to arrange) of the "leak" means that Council's attention will be distracted from discussing/focusing too hard on the Durgan Debacle.

Who would gain from that?

Maybe though, I am just too cynical?

The future direction of the ICAEW will be decided over the coming months, it will be a very exciting period indeed. I will be following developments very closely.

An Invitation

Council members are invited to post here, or email me directly, any news items relating to the current ICAEW Council Conference.

I regard the attitude of the ICAEW, as quoted by Accountancy Age, re questions over the Durgan Debacle as being a "private matter for council" as being contemptible.

I offer those members of council, who actually respect the membership, an opportunity to tell the membership what is really going on in their ICAEW. I will maintain your anonymity should you so wish.

The days of deals being done in smoke filled rooms are over.

Durgan To Stand?

There are rumours emanating from the ICAEW bunker that indicate that Graham Durgan may be considering "re-accepting" the presidency.

The Unanswered Questions

The Durgan debacle refuses to die down, and there are rumours emanating from the ICAEW bunker relating to the how the Independent heard about the matter in the first place.

The post Durgan "clean up" by the ICAEW, in itself, has raised a number of questions which need to be answered:

• Why was Council (and apparently also the Board) not informed of the impending problem sooner? These contracts had been under negotiation for several months not mere days.



• Was it just coincidence that the issue was raised at the very last Council meeting before the new President took office? Earlier notification might have enabled the matter to be resolved without the need for Graham to stand down.



• The Independent article was virtually word-for-word what the Chief Executive said to Council on 3 May 2006. Any leak would, therefore, appear to be either internal or a Council member with perfect memory.



• Why is it necessary to have a single "preferred supplier" status, why not simply a quality threshold (a "kitemark") with anyone passing it awarded appropriate status? Had EWI been one of two or more such suppliers, there would have been no need for Graham to stand down. Again, a coincidence?



• Council opted for the Group of Past-presidents to look into the issue rather than commissioning an independent, external audit. Council expected the Group to report back rather than just providing an oral comment. An external auditor would, of course, have provided a full written account of the issues. Perhaps Council was steered towards the route it chose as this was easier to influence.



• An internal audit has revealed "some issues" - why hasn't this report been made available to Council?



• Who overlooked inviting ATC International to bid, and why?



• The Special Council meeting was called at very short notice and attended by only 41 Council members (out of 96). Why wasn't the date advised to Council members earlier so that they could pencil it in their diaries... just in case a meeting was required. Indeed, were any Council members advised to pencil in the date prior to the official announcement? If so, who was advised, by whom and why?



• Has this just been a momentous cock-up by a junior member of staff, or a very cleverly orchestrated conspiracy by someone much more senior?



• Was the leak deliberately designed to bring Durgan down? If so, who leaked the story and why?



• Why is it left to this site to expose these issues, is it not the role of the professional media to be investigating this?

I look forward to seeing the above questions answered.

ICAEW To Review Internal Controls

Accountancy Age report that following the Durgan contract fiasco, there will be a review of the internal control procedures relating to how preferred supplier contracts are awarded.

The review will be carried out by Ian Morris, President of the ICAEW.

I have twenty years international experience working in industry, reviewing business controls, advising on best practice (eg purchasing and contract tendering), conducting fraud investigations and implementing codes of ethical conduct.

The ICAEW are more than welcome to contact me if they wish for some impartial, arms length, advice on this matter.

Durgan Not to Stand - Confirmed

The Independent confirm's that Graham Durgan will be stepping aside as President of the ICAEW, as noted here yesterday.

The article notes that the ICAEW maintain that Durgan's interest in EWI, the training company awarded the Chinese and Russian contracts, were openly declared throughout the tender process.

However, what the ICAEW failed to do was hold an open tendering process allowing all companies to apply for the contracts.

That is why they are in this mess. Unfortunately, the ICAEW don't see it this way and are blaming the press for this.

Confusion at The ICAEW

Whilst the ICAEW reels from the Durgan contract fiasco, its standing with other professional bodies has taken another public battering; as Des Hudson, CEO of ICAS, questioned the ICAEW's recruitment strategy.

He is quoted by Accountancy Age as saying:

"We were surprised by the strategy, with respect to the various qualifications."

He noted that by getting other accountants to take up the ICAEW qualification, the ICAEW was contradicting its previous strategy of merging with other professional bodies whilst trying to keep the qualifications distinct.

Quote:

"To me there's confusion between their current and previous statements."

As John Prescott has found to his cost, slings and arrows can be survived - ridicule cannot. The leadership of the ICAEW are making themselves look ridiculous.

Durgan Not to Stand

It is reported that Graham Durgan will not stand for Presidency of the ICAEW next week.

This has yet to be confirmed by the ICAEW.

Had the ICAEW followed an open tendering process for the training contracts for the Chinese and Russian contracts, much of this fuss would have been avoided and Durgan might still have been able to stand for President.

The ICAEW needs to practice what it preaches when it comes to best business practice.

Assuming that Durgan is stepping aside, he has saved the ICAEW a large amount of embarassment; I wonder if others will follow his example?

Misrepresentation and Shabbiness

Today's Independent reports that the qualifications of the president-elect of the Institute of Chartered Accountants in England and Wales, Graham Durgan, were misrepresented on his company's website.

Seemingly Durgan was being passed off, on the Emile Woolf International College website (a company which he owns 60% of), as having both LLB and FCA qualifications.

The only trouble is, according the The Independent, he is neither a bachelor of law nor a fellow of the ICAEW. He is in fact a bachelor of sciences, and an associate of the ICAEW.

I recall Durgan teaching me at BPP, back in the 1980's (he was very good), and do not understand why he is not an FCA; given that if you keep up your CPD etc, you become one after a defined period of time should you choose to apply.

This news comes hot on the heels of the report in yesterday's Independent that revealed that Durgan's company has been named as the "recommended supplier" of training, for the newly won ICAEW contracts to provide training to Russia and China.

It is reported that this could generate contracts worth £200,000 a year to EWI.

Not surprisingly the Independent notes that Durgan's senior role within the institute and EWI has fuelled concerns over potential conflict of interest.

The Independent quotes one member of the profession as saying:

"It's a bit shabby that he was allowed to pitch. If you want to be a commercial business, then don't be president...It's a bit grubby."

Durgan's spokesman is quoted as saying:

"During his deputy presidency, Graham has stepped away from any commercial decisions by the institute that could benefit his firms. During his presidency, he will play no active executive role in his businesses."

An ICAEW spokesman is quoted:

"Throughout the process, the deputy president declared a financial interest in EWI which had been approached to do the work. He was not involved in any way in the evaluation process."

They don't get it do they?

It is not just a question of being independent, it is a question of being seen to be independent.

That is drummed into you from day one of your training contract, it is lamentable that the ICAEW who spend so much time lecturing others about ethics and independence cannot practice what they preach.

The story gets worse, the ICAEW are reported to have described the agreements with EWI as "non-exclusive". Yet this is contradicted by CEO Eric Anstee, who is quoted in the Independent as saying:

"We do not envisage working with further training firms until the volume of students in each location builds".

Indeed, as if to rub further salt into the wounds, ATC International told the Independent that it was not asked by the ICAEW to pitch for its contract for Russia.

Correct me if I am wrong, but based on my experience running fraud investigations, audit departments and companies, open tendering is the bedrock of an ethical and well run business. This is another area that the ICAEW is fond to lecture the world on, yet fails to practice what it preaches.

It now seems that the ICAEW has realised that is has got itself embroiled in yet another mess, that could have been so easily avoided. They have told the media that no agreements with EWI have been signed, and that a committee of past presidents will look into the selection process and will report in the next few days.

The phrase "shutting the stable door after the horse has bolted", springs to mind.

I assume that, depending on the level of outcry and damage to the brand that this sorry little tale produces, there will be some form of political fudge; ie Durgan will step aside, or the contract will be awarded to another supplier.

Too little, too late.

The damage has been done.

We should never have been placed in this position in the first place. The ICAEW claims that it is run by professionals, with industry and business experience. However, the leadership have succeeded yet again in damaging the brand value of our qualification.

This dismal story is another addition to the sorry tally of evidence, that has been building up over the past few months, that shows that the executive and council of the ICAEW are unfit to lead the ICAEW viz:

• The leadership of the ICAEW were trounced for trying to bully us into merging with CIPFA.



• Using the services of Media Strategy, a PR company that breached the Code of Practice of the Association of Professional Political Consultants which resigned its membership of that body rather than face an investigation.



• Damaging the ICAEW's reputation by delaying the introduction of the new syllabus, and most importantly the ethics module, for 2006.



• Wasting our money on a futile MORI poll asking us why we voted against the merger, don't they read or listen?



• Angering and alienating accountants around the world by trying to push through a name change, that ended up being blocked by the Privy Council.

Individually these points are damning enough, yet put together they speak volumes about the quality of leadership at the helm of the ICAEW.

I ask the following of the membership:

• When will we be rid of this shambolic leadership?



• When will the ICAEW learn that it is here to serve the interests of the membership, not the other way around?



• When will that Victorian anachronistic structure known as Council be removed from office?

Failure to address these issues will see the end of the ICAEW as a legitimate force, and respected brand, within the profession.

I don't want to see that happen, neither do the rest of the membership. The time for the membership to take control of the ICAEW is now.

I have voted against all of the proposals put forward by the ICAEW for the forthcoming AGM, as a protest about the way the ICAEW is being led.

I would recommend that, in order to send a clear signal to the leadership that we want change, others do the same.

If you cannot bring yourself to vote against all of the resolutions, then at least vote against the subscription rise (since it will only be wasted on yet another merger campaign next year), and the awarding of honourary FCA's (we are not a university).

The time for action is now.