Grey matters ethical dilemma: In a jam – the verdict

Javid needs to process a transaction that is above the amount he is allowed to approve. His supervisor is not around but provides her login details so Javid can complete the transaction himself. Following this, what might he do?

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Javid works at FAIRLY, in a busy operations department handling foreign exchange settlement transactions. The department is under pressure because of the volume of work, which has also resulted in some technical system issues. This has, in turn, increased the number of ‘exceptions’ that require manual processing, putting further pressure on the team.

Javid is one of five junior staff members in a team that is supervised by Claire, who reports to a ‘middle manager’, Colin. Fed up with the increased workload, Colin has given notice to leave FAIRLY, and there is no obvious replacement from within the existing team, which already needs more staff in order to maintain the level of service required and avoid expensive mistakes occurring. The team, including Colin and his replacement, when appointed, is managed by Delores – an experienced manager.

Each of the junior staff members can approve transactions up to £500,000 without sign off by a more senior manager, but all transactions larger than this must have four eyes sign off, which must include approval by Claire, Colin or Delores. Since Colin handed in his notice, although effectively he still has more authority than Claire, Delores has decided that she and Claire should approve the majority of the transactions between the two of them, which has made it a challenge to achieve the deadlines for processing the day’s work.

Javid receives a phone call from Claire, saying she will not be in the office until 10.30am

In Colin’s final week, with his replacement not due to start until after he has left, Delores is on annual leave, enjoying a long-planned overseas trip to visit her family. Although a new junior team member has been brought in to help with the processing, they are not able to act as a second signatory, and so that responsibility rests with Claire and Colin, who increasingly seems reluctant to put himself out for FAIRLY and his colleagues. On Thursday morning, the day’s work contains a payment exception requiring manual processing of a payment for €100m on behalf of a major client to pay its associated company in Italy. For it to receive the required same-day settlement, it must be authorised by 11am.

Shortly after 9am, Javid receives an anxious phone call from Claire, saying that her son has been ill during the night, and so she cannot send him to school. She has arranged a babysitter, but unfortunately the babysitter cannot reach her until 9.15am, which means  that Claire cannot reach the office until 10.30am.

She checks with Javid regarding any urgent items that might be outstanding, expressing particular concern about the €100m payment. She suggests to Javid that he should get Colin to authorise the payment if she does not reach the office in time. Colin, having been in the office earlier on, is now nowhere to be seen.

Time passes and Javid waits anxiously for Claire to appear. In the meantime, Colin shows up and Javid approaches him regarding authorisation, but Colin tells Javid that he should get Claire to authorise the large payment and then disappears again. At 10.45am, Claire phones Javid again, saying that she is stuck in traffic that has not moved for 20 minutes, and she asks him whether the payment has gone through. He explains that he cannot get Colin to authorise it, and with Delores being away, there is no obvious person available whom he can approach.

Claire is very concerned about this and tells Javid that she will give him her login details which will enable him to add her ‘authorisation’ to the payment, since failure to make the payment will have serious repercussions for the firm and for both herself and Javid. Colin clearly does not care and Delores, being on holiday, can hardly be blamed. Javid is uncertain about the propriety of what Claire has told him to do, but goes ahead anyway and the payment is made.

Failure to make the payment will have serious repercussions for the firm and for both  Claire and JavidShortly after midday, Claire arrives at the office and expresses relief that the payment has been made. However, she also suggests that she and Javid must now consider what further action, if any, they should take. Javid, relieved that what could have been a major problem has been averted, is taken aback by this and suggests four possible options.

The CISI verdictDecember’s dilemma concerned a situation in which many of us may find ourselves on occasion: what should we do when designated chains of command are broken? When is it appropriate to take a decision ourselves and when should we refer upwards?

In this instance, a transaction sanctioning line was broken by holiday absence and travel delays, compounded by a lack of co-operation from a designated person, who was leaving the firm, which raises other issues.

The 68 readers who voted had four options to choose from. Javid, the junior person involved in the dilemma, should:

A. Report the matter when Delores (line manager) returns from holiday on Monday (18% = 12 votes).
B. Do nothing. The payment has been made with the necessary authorisations, albeit one of them was obtained in an irregular manner (3% = 2 votes).
C. Escalate the matter, although conscious that it may result in criticism of your colleagues (71% = 48 votes).
D. Let Claire (the supervisor) handle it; it is her problem. Javid is only doing what he is told (9% = 6 votes).

Although the majority vote in favour of escalation is quite clear, it does mean that 20 people voted not to escalate the matter and essentially keep the problem within the team. Our view is that this is definitely a situation where honesty, openness, transparency and fairness are paramount and there is no merit in trying to keep the problem within the team.

    This dilemma appears in the December print edition of the S&IR. The results of the survey and the opinion of the CISI also appear in the March 2015 print edition of the Securities & Investment Review.
    Published: 02 Dec 2015
    Categories:
    • Opinion
    • Integrity & Ethics
    • The Review
    Tags:
    • Grey Matters

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