Reset the moral compass

BOB SOUSTER provides a solution for the ethical dilemma of Nathan, a business banking adviser at HBT Bank plc. His neighbour has an issue over her payslip with her employer – a loyal client of the bank.

Nathan is a business banking adviser working at a provincial branch of HBT Bank plc. One of his client companies is Camphappy Limited, a privately owned company that operates three large outdoor leisure parks in the area.

The company has banked with HBT Bank plc for many years, and the manager of the branch was delighted when the company continued its relationship with the branch after being taken over by a larger leisure group four years ago. The commercial credit turnover of the company is growing at a steady rate, and the company rarely needs to use its overdraft facility, even during the low season. Nathan meets the Managing Director and Finance Director of Camphappy Limited once a year to review the relationship. The two directors are happy with the service that the bank provides and the account probably needs less attention than most business accounts at the branch.

While relaxing at home one day, Nathan received a visit from Alison, a neighbour. He did not know Alison very well as she banked elsewhere, but they have had brief conversations from time to time in the local convenience store or when they happened to be on the same train to work. Alison asked Nathan for his advice on something that was bothering her in relation to her job. She said that she had called because she knew Nathan worked at the local bank and would probably be in a position to give her some advice.

Alison worked as a cleaner for Mop Limited, a company to which Camphappy Limited outsourced the general cleaning duties at its parks. She said that she was concerned about the amount of tax and National Insurance contributions that Mop Limited had been deducting from her wages. Although Nathan insisted that he had no expertise in these matters, Alison produced three payslips and asked Nathan to look at them.

Even at first glance, Nathan could see that there was something very wrong. For each of the three months, the income tax and National Insurance contributions deducted were exactly the same figures. He also noted that the payslip only had Alison’s given name on it. There was no reference to her tax code. Alison could not recall ever giving her surname to the company, or being asked for it.

Nathan told Alison that he would have some concerns in her position, but that it was not something on which he could give specific guidance, and suggested that she raise her concerns with the company. However, he was troubled that a very good client of the bank could be doing business with a company that was obviously not engaged in orthodox employment practices. At the office the following day, Nathan ran a companies register search on Mop Limited and discovered that it had not filed accounts for over two years.

Mop Limited had no account relationship with HBT Bank plc. Nathan is an employee of the bank and must act in the best interests of the bank, and its clients, at all times. However, there are numerous complications if he wishes to take the matter further.

Neither Alison nor Mop Limited are clients of the bank. The information that Nathan obtained from Alison arose from a conversation between two private individuals. Nathan admitted to not being an expert on income tax or National Insurance matters, but simply “smelt a rat” having perused the payslips.

Purely from the employee’s perspective, Nathan would have some difficulty justifying any intervention based on hearsay, albeit very powerful evidence of malpractice on the part of Mop Limited. By passing his concerns on to Camphappy Limited, he would risk a potentially hostile interview with his clients, who could legitimately ask what business it is of his to express concerns about the private business relationship between Camphappy Limited and one of its suppliers. In short, it is none of his business. All ethical decision-taking models start with the question, “What are the facts?”, and in this case Nathan does not know all of the facts.

By extending Nathan’s personal ethical stance on the issue, however, it may be legitimate for Nathan to take action as a private citizen, based upon his civil duty. Lawrence Kohlberg’s theory of moral reasoning suggests that this so-called “post-conventional” level of reasoning sees individuals consider their actions from the point of view of general obligations to society to do what is right. This contrasts with the pre-conventional approach (to seek reward or avoid punishment...we learn this at school by being ostracised for telling tales) and the conventional approach (to do what family, peers and colleagues expect).

Nathan could contact the HMRC confidential information service that was set up specifically to take reports on such cases. He does not have to give his name or personal details. The ethical justification for doing so is that as a citizen he has a duty to protect the public interest, just as those who report benefit cheats to the Department for Work and Pensions have a similar duty. If the company does not know the employee’s surname, it cannot be paying tax on her behalf, and the probability of income tax deductions and National Insurance contributions being identical each month is miniscule. Nathan’s duty here is nothing to do withhis role as a banker, but his moral duty to the public.

The issue of defrauding the public purse has changed in moral intensity in recent years. Moral intensity is a concept that considers ethical behaviour on the basis of how serious the issue is perceived to be. The simplest example is that some people who would not dream of stealing from a shop routinely fail to return items that they have borrowed from family members. The former is regarded as having high moral intensity and the latter low moral intensity. Shifts in public attitudes take time, but there are several examples of this occurring on a gradual basis. Drinking and driving was once seen as a low moral intensity issue but it is now broadly accepted that it is very wrong, or in other words occupies a position of higher moral intensity. In like manner, “fiddling the taxman” was once perceived by many as being all right if one could get away with it, but more people now see that paying less than one should means that others must pay more.

Ideally, the initiative here should come not from Nathan at all but from Alison, as she is in a position to ask the appropriate questions of her employer and take necessary actions. Employees are often reluctant to “rock the boat”, especially if the individual or family is dependent on the income. Even if Alison decides to take no further action, she cannot be the only cleaner working for the company who suspects that all is not well, so sooner or later the issue would be bound to resurface.

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