Issue 23: February 2017
The main topic addressed in this issue of Setting the Example is an ethical culture. Our lead article looks at the importance and value of an ethical culture relative to the apparent obstacles to the task of creating an ethical culture. This is supported by an in-depth review of what constitutes a sound ethics strategy, and by the article which we recommend, “Boring ethics and code of conduct training enables risk to go unmanaged”. This issue also includes a commentary on best practice for Social and Ethics Committees and insight from a Department of Trade & Industry Social and Ethics Committees conference.


In theory creating an ethical culture makes great sense and should be a high priority objective for all organisations. But in practice there are a couple of stumbling blocks to realising this goal. Firstly, organisations do not always have a clear, strong rationale as regards what organisational or business need the culture change would fulfil or what benefit it would deliver. Secondly, changing an organisation’s culture - in this case to be more ethical - is widely recognised as a very difficult leadership task. Unpacking these issues is important to ensure that the pursuit of an ethical culture is not undermined. Read More...



Published in 8 December 2016 issue of Thought Leadership by USB-ED Ltd

A request to write an ethics strategy for an organisation, in theory, should be viewed as welcome consulting work. It is also a relevant request given both the importance of workplace ethics and the crucial role that strategy fulfils in an organisation. So what’s the catch? Read more…



On 15 February 2017 Comair’s 14 year legal battle against South African Airways (SAA) resulted in the South Gauteng High Court ordering SAA to pay Comair R1.16 billion (R554 million plus interest at 15.5%) for engaging in anticompetitive behaviour involving travel agent incentive schemes between 1999 and 2005.

Comair is the second airline to succeed in a claim against the national carrier concerning anti-competitive conduct. Nationwide launched its claim in 2001. In August 2016 the South Gauteng High Court ordered SAA to pay Nationwide R104.6m plus interest as damages for its uncompetitive practices, most of which related to the travel agent sector. But it could be regarded as too little too late because the airline went into liquidation in 2008. The court agreed with the Competition Tribunal that SAA's behaviour from 2001 to 2005 was the biggest contributing factor to Nationwide’s loss in passenger volumes.

This situation can be viewed as a penalty that SAA deserves. As Vernon Bricknell, former owner and MD of Nationwide Airlines, told Fin24 in August 2016: it "serves them right". But there are more implications to this than simply that the law prevailed.

The latest judgement adds to the embattled airline’s struggle to remain a going concern. It also raises the possibility that yet another bailout would be required to keep SAA solvent. The most recent bailout was in September 2016 when Finance Minister Pravin Gordhan approved a R5 billion going concern guarantee with conditions. And therein lies the sting in the tail – because the South African tax payer foots the bill for the bailouts.

Thus the true financial cost of the penalty is not borne exclusively by the perpetrators: Instead the cost of misconduct is effectively “shared” among South African tax payers. This raises two crucial ethical questions. Does the fine realise its intended outcome of being an effective deterrent to unethical practices? Or does this situation warrant looking at personal liability?
by Cynthia Schoeman
An update on Social and Ethics Committees
Our August 2015 newsletter article posed the question of whether Social and Ethics Committees still needed guidance, and answered it in the affirmative with five recommendations that are still relevant. Adding to this are two further contributions - King IV TM recommendations and a discussion about proposed changes to the Companies Act Regulations by the Department of Trade and Industry.
Read more …


Bank collusion: but no criminal sanction
The financial services sector is again in the news for all the wrong reasons. This time 17 banks, including three of SA's big banks, are accused of price-fixing and market manipulation in the foreign exchange market.

But, even if found guilty, none of the banks face the prospect of criminal sanction because the Competition Act amendment to provide for criminal sanctions to be imposed on individuals for certain competition law contraventions only came in effect from May 2016, which was after these contraventions were committed. While the Competition Commission is expected to pursue the maximum possible fine, past fines levied on organisations in this sector internationally do not appear to have curtained incidents of misconduct.

Hereafter, hopefully, the opportunity for unethical behaviour in SA will be balanced with the much higher personal liability.


Recommended reading
Boring ethics and code of conduct training enables risk to go unmanaged.
Read more …

By Dr Attracta Lagan
Co-Principal at Managing Values Pty Ltd, Sydney, Australia
8 February 2017

About Ethics Monitoring & Management Services (Pty) Ltd

Ethics Monitoring & Management Services was started by Cynthia Schoeman to help organisations to improve ethics in the workplace and to encourage them to manage ethics proactively. Cynthia developed The Ethics Monitor, a web-based ethics survey, which enables organisations to measure, monitor and report on their ethical status. Ethics Monitoring & Management Services also offers ethics talks, workshop, consulting and training.

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Contact us

Cynthia Schoeman
Managing Director
Ethics Monitoring & Management
Services (Pty) Ltd
011 447 7661; 082 821 3729

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