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At a glance
As told to Alexandra Cain
Question: “I am an employee of a consulting company and have recently discovered that my employer is leaking confidential client information among other executives within the company in an attempt to assist other clients — who are competitors. I suspect this knowledge has also been used to gain further project work.
I am also under the impression that the CEO has knowledge of the situation and condones the behaviour as part of growing the bottom line/renowned capability in the market. How should I react, and who should I speak to?”
Answer: I always approach these questions by going back to the APES 110 Code of Ethics for Professional Accountants. Five key principles sit at its core: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
Integrity, confidentiality and professional behaviour are at risk in this case. The most obvious is confidentiality, because there seems to be a deliberate leak of information to source new business.
This is also clearly in breach of professional behaviour expectations of those involved and the CEO for tolerating it.
The first step is to collate the information and consider who the affected parties are.
The second step is to reflect on whether the organisation has appropriate procedures and conflict resolution resources to support and address the issue. If it is a bigger organisation, there will likely be procedures for escalating these matters.
The framework for addressing issues such as these, set out in the Non-compliance with Laws and Regulations provisions in APES 110, provides a useful guide regardless of whether your company has such internal procedures.
There is also the question of who you raise it with. There is no straight answer here. It could be a risk and compliance officer who looks after the internal procedures of such matters or an executive who is not party to the data sharing.
It could be the chair of the risk and audit committee or the chair of the board. I would start with the internal processes, unless you feel there is a threat to that, in which case, you would possibly go to the next level.
Once you decide how to approach it, think about threats. Maybe the risk and compliance officer knows the CEO well, so there may be a familiarity or self-interest threat to objectivity in their response.
Assess whether you are ready to report it internally or whether you need specialist help if you feel the internal process may diminish or sweep the issue under the carpet.
Sometimes it is good to talk to third parties such as a lawyer or a professional accounting body like CPA Australia, which has resources to support members.
You would be wise to consider the whistleblowing regime and protections set out in the Corporations Act 2001 (if you are located in Australia), as the last option or step in the process. And as you consider this option, you should constantly check yourself to ensure you are going down this path for the right reasons. If you choose this option, I suggest seeking legal advice — it is a long path.
Situations such as this occur for several reasons, including pressure for shareholder or bottom-line returns, a vain attempt at brand protection, or shifting market dynamics and lack of innovation. Often there is an undertone that the business is not adapting to the world and, as a result, employers may act underhandedly to win new business.
It may also be the result of weak governance or a lack of appropriate controls.
Organisational and individual hubris can also be a real factor. In this case, it seems the CEO may be to blame in developing a complacent and subsequently unethical culture.
Disclaimer: This article should not be considered as legal, tax or financial advice and may not reflect the views and opinions of CPA Australia. CPA Australia does not warrant or make representations as to the accuracy, completeness, suitability or fitness for purpose of this publication and disclaims all liability and responsibility for any acts or omissions made in reliance of this publication. Readers should seek their own professional advice that takes into account their own personal circumstances.
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