Sunday 23 October 2016

Lessons from Console scandal: How to ensure that it never happens again

A three-pronged approach, starting with prevention but progressing to prosecution, is needed in the charity sector, writes Ros O'Shea

Published 24/07/2016 | 02:30

Console's fall from grace is yet another scandal involving a well-known Irish charity that has come to light in recent years. Another organisation doing immensely important work but horribly let down by the deceitful, illegal and frankly depraved actions of renegade executives.

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The issues at Console are arguably the most shocking, given the amount of public funds invested, the extent of the deception and the fact this was known for some time. The impact on the charitable sector as a whole is also profoundly depressing, given the inevitable reduction of donations in the wake of such blatant corruption. Even more troubling is that to the question "could it happen again?", the answer is probably "yes".

This has to serve as a clear call to action. We simply cannot allow these dramatic failures in governance and abuses of power in the sector that looks after the most vulnerable in our society. They deserve better. My recommendation is that a three-pronged approach is required, starting with prevention but progressing right through to penalties and prosecution.

First of all, it is essential we mitigate unethical practices through good governance. Secondly, we investigate deeply when things are not right and, lastly, we litigate fast when wrongdoing is evident.

This three-step methodology is employed the world over by best-in-class for-profit organisations. Yet it does not seem to have translated into the non-profit sector, where it is equally, if not more fundamentally, required.

It requires a nuanced approach and creative solutions to plug the gaps so keenly exposed by the scandals, while recognising that charities may not have the same resources at their disposal to ensure effective compliance as the private sector.

As prevention is always better than cure, the balance should be weighted on mitigating steps, making litigation less likely. This sensible checklist could be - and should be - adopted by any charity or not-for-profit organisation that does not have such criteria in place. In turn, it should be overseen and enacted by a fully empowered charity regulator.

Prevention - good governance and mandatory guidelines

• Make compliance with the Code of Conduct for Community, Voluntary & Charitable Organisations mandatory - as opposed to voluntary, which is currently the case. • Require charities in receipt of State funds to have an external review of their governance. Publish the results with a "transparency mark" for good performers. • Professionalise the board-recruitment process, using the State Board Appointments service as the model. • Ensure the board is appropriately structured with clear terms of reference and that all its members are fully trained on their governance, risk and compliance responsibilities. • Appoint a CEO who truly espouses the values of the organisation and can lead it with integrity, inspiring others to follow his or her vision.

• Make ethics a regular feature of staff training and communication.

Investigation and transparency

• Have a secure, independent and well-advertised whistle-blowing channel available to employees so that they can report issues of concern.

• Properly resource the charity regulator, giving it the teeth to properly regulate compliance among its members and investigate suspected cases of wrong-doing.

• Plan for appropriate use of shared resources with associated enforcement bodies, facilitating more efficient and effective investigations.

Enforcement and litigation

• When illicit actions are evident, prosecute the offenders swiftly. If necessary, the charity's legal costs should be subsidised or underwritten by the State, to help ensure a full redress.

• Communicate sanctions to serve as a deterrent to potential offenders and as a bridge to rebuild trust among the public.

Properly implemented, this three-step approach and checklist would dramatically improve the governance of our charitable organisations. It would help rebuild the public trust, which is so necessary to underpin their much-needed funding structures so that their vital work can continue. It would safeguard the needs of our sick and our vulnerable and all those who care for them.

So what are we waiting for - the next scandal?

Ros O'Shea is an expert in governance and business ethics. She is the author of Leading With Integrity - A Practical Guide to Business Ethics, published by Chartered Accountants Ireland

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