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Goldman Sachs Muppetgate: A Lesson for Nigeria’s Corporate World

By on March 19, 2012

Editors Note: This guest post is written by Michael Irene, he is a creative writing doctoral student at Anglia Ruskin University, Cambridge.

I was drawn to the article “Why I left Goldman Sachs” by Greg Smith and published in The New York Times of March 14, 2012. It is a tale about the growing ugliness of big business firms.

The author, a former employee of Goldman Sachs (one of US’s most successful banks) resigned after almost twelve years at the firm. Allow me to indulge you in some of his reasons for making this gallant move: “To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

Of course, one of the features of running a business is “money making”. The author’s argument is that clients (human being(s)) should be considered before profit making. And when his company lost her secret sauces: “teamwork, integrity, a spirit of humility, and always doing right by [their] clients,” Greg left without looking back. His exit was bold and honorary. He justified his step by expounding: “It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.”

It is impossible to notice that he espoused the old axiom:  “A good name is more desirable than great riches; to be esteemed is better than silver or gold.”

Corporate immorality and insensitivity is a global phenomenon. For the sake of this article, however, I would like to shine my critical light on Nigeria.

Over the years, virtually all Nigerian companies have placed profit making before the customers and unfortunately, before their employees. I draw evidence from recorded events, personal experience and stories told by friends.

Some years ago, I was opportuned to work in one of the top banks in Nigeria before I walked away. As a staff, we were made to realise that integrity and honour were angelic traits not human features. You were trained to bring money to the bank. The slogan was “money first before anything else.” And to get this money before anything, some of my colleagues were forced to do everything, ranging from sex with customers to embarrassing supplications like kneeling before customers in public places. If you couldn’t, then you were forced out of the company. I left without saying a word.

Also, as a staff member, it was frowned upon to report your company’s weaknesses. Whistle blowing, after all, is not a Nigerian thing. “Chop make I chop” culture has weakened good corporate governance in Nigeria. Once upon a time, a friend of mine noticed that the financial statement for the said year was faulty and presented his findings to the board. His act was not received well by the board. Some members of the board got scared then went ahead to set him up and he was thrown into a Nigerian maximum prison. Anytime he recalls the experience, tears fill his eyes. Now, the Company and Allied Matters Act (1990: Part XI) states that: “The accounting records shall be sufficient to show and explain the transactions of the company and shall be such as to (a) disclose with reasonable accuracy, at any time, the financial position of the company; and (b) enable the directors to ensure that any financial statements prepared under this part comply with the requirements of this Act as to the form and content of the company’s statements.” So, why do most Chief executives and directors fear presenting accurate books? The answer is simple: They lack integrity and honour.

In 2009, this same moral deficiency led to N1.1 trillion bad loans, liquidity ratio below minimum, over reliance on interbank and CBN borrowing and the sacking of five bank CEOs.

How can honour and integrity be instilled in our corporate organisations? What lessons can we fetch from Mr. Greg’s well of honour? How many individuals will walk away from such a company at these crucial economic times? Is it not safe to conclude that most employees and employers put profit making over clients? How can this venal corporate ugliness be curbed? In a country where greed and avariciousness is the order of existence, can this even be achieved?

I believe that corporate companies in Nigeria should encourage and promote more whistle-blowing. Near and Miceli (1995:679) argue that: “whistle-blowing—in and of itself—is not an unqualified good; its benefits are gained only when the complaint is valid and is effectively handed.” Company staffs should be encouraged to voice their opinions in an appropriate manner. They should not be judged or punished for spotting flaws. Only an individual with a strong belief in a company would go an extra mile to point out loopholes. Staffs should be bold and stand for what is right. They should never agree to bad treatment and voice their frustrations at any given time.

Furthermore, auditors must carry out their duties with dogged determination. They must not be lured by unscrupulous individuals in a particular company. The duty of an auditor is more succinctly stated in the decision of RE: LONDON & GENERAL BANK (NO. 2) [1895] CH.D 673 @ 683 where the court said:  “It is the duty of an auditor to bear on the work he had to perform that skill, care and caution which a reasonably competent, careful, and cautious auditor would use. What are reasonable skills, care and caution must depend on the particular circumstances of each case.” From the above, one may conclude that the auditor is the moral judge of the scheme of things in a company.

Schools have a role to play too. Our children must be taught that money is not everything and that integrity is a vital tool for their future. This will help create a new generation of CEOs and directors who understand the importance of being earnest.

Regardless of how idealistic this may seem to an increasingly resigned Nigerian, I believe that these solutions can change the ugly face of the corporate world. They are achievable. In a country where corruption is rife, the only way to eliminate the cancer is by taking little steps. The onus is on every individual to be the change they want to see in the country.

God bless Nigeria.