THE ACADEMY OF BUSINESS STRATEGY
ETHICS STRATEGY BLOG
Hatitye Zhakata (CBS) B.Acc CFE
After graduation in 2000 I had the great privilege of joining ASDA – Wal-mart in London and working in other positions after that before joining Ernst & Young and launching my career specialising in forensic accounting in 2003. One of my first assignments was for Unilever, the world’s second largest consumer goods company.
What would you do?
One of the main concerns here in Zimbabwe at that time was the shortage of foreign currency. Companies were struggling to get hold of foreign currency on the official market i.e. the Reserve Bank of Zimbabwe and financial services sector. As a result, most executives in corporate Zimbabwe felt that they had no choice but to turn to the unofficial so-called parallel or “black” market. This was clearly illegal but I remember hearing remarks by executives such as; “What choice do we have?” or; “It’s either that or we go broke.” If faced with such a difficult situation, what would you do?
Further compounding these ethical problems were those individuals and corporations (mainly financial services) who obtained foreign currency at the official rates and then capitalised on the arbitrage by selling the foreign currency on the parallel market at much higher rates of exchange. Whilst these activities kept the country going, they were clearly unsustainable because of the market participants’ behaviour. Abuse of depositors’ funds, greed, dishonesty, uncontrolled risk taking, unethical and illegal practices were the order of the day and so it was inevitable that the bubble was going to burst.
Sounds familiar? Yes, alas we had a financial crisis on our hands which started in 2003 and only subsided in 2005. The effects of the fallout were to last much longer than that though. Casualties of the crisis that I investigated included Century Discount House, Sunpol Asset Managers, Platinum Asset Managers, Continental Securities and Continental Asset Management which all went into liquidation.
It was not only financial services businesses that were affected, however, as other corporations in other sectors inevitably suffered with the local unit of the global scale maker, Avery Berkel being a prime example whose closure I found no pleasure working on. If left up to me, I would have made sure the company stayed open and people kept their jobs.
Indeed, the 2003/2004 financial services crisis in Zimbabwe had far reaching consequences. I take no pride in saying that we were first (before the global financial crisis, that is) because I would rather be first at other things!
It was certainly not Zimbabwe’s finest hour but the consequences were no different from those of the subsequent global crisis of 2007/2008 whose effects are still being felt today. It was a disaster. Company closures, massive job losses, loss of depositors’ funds were some of the consequences common to both crises. Of course, I cannot forget to mention the humanitarian consequences of all this which are seldom mentioned such as the suicides, divorces and so on that occurred as a result. If faced directly with such calamities what would you do?
Whilst working on these assignments certainly did not do my CV any harm, seeing the thousands of people that I met going through a lot of pain and suffering is an experience that I will never forget and hope never happens again.
Fast forward to Zimbabwe’s hyperinflationary environment that was compounded by the aforementioned financial services crisis and the situation becomes more ominous. As Zimbabwe relied even more on imports as the years went on, it was inevitable that increased demand for foreign currency led to a vicious cycle that saw further depreciation of the local currency. Obviously, the people who were benefiting from this situation were foreign currency dealers on the parallel market.
Meanwhile, goods and services sold in local currency became more and more expensive each day. Prices for household goods would go up more than three times a day. I remember going shopping one day and putting things in my shopping trolley. By the time I got to the checkouts, the prices for half of the things that were in my trolley had gone up! Some say our hyperinflation peaked at 231 000 000 % whilst others say it peaked at 6.5 sextillion% (if that figure makes sense at all!). Whatever the figure, hyperinflation in Zimbabwe peaked in 2008 before the multicurrency system was introduced in 2009.
Clearly, the world was a different place then from what it is today. Since then, information and communications technology (ICT) have become even more sophisticated; with hundreds of Smartphone models, portable devices, millions of apps, file sharing, cloud computing and a vast array of other innovations.
It follows, therefore, that the world now faces ever increasing dilemmas on how to deal with the challenges faced by the proliferation of this new technology in addition to the challenges that we faced traditionally as outlined above. For example, how do we deal with the rise of personal smart cards, memory cards and digital cameras and their use in the work place? All of this just goes to show how good ethical practice is important in ensuring that our businesses and economies function as well as we originally intended by taking appropriate risks whilst simultaneously ensuring that we avoid the disasters highlighted in this article.
True, it is correct to say that ethics is about what is right and wrong. However, it does not concentrate on those matters that are clearly wrong or right, commonly referred to as “black” or “white” areas. Rather, discussions around the subject of ethics seek to deal primarily with matters that are unclear, the so called “grey” areas. It is these dilemmas that arise in our day to day activities that ethics is all about.
We will, therefore, be looking at these situations in future editions of this column as well as the causes of and consequences that arise from fraud, waste and abuse and how we can mitigate the risks of these occurring in the first place.
ABOUT THE AUTHOR
Hatitye Zhakata (CBS) B.Acc CFE is an approved Certified Business Specialist (CBS) with the Academy of Business Strategy and his specialist subject is ethics strategy. He has achieved an B.Acc from Northumbria University. He is also a Certified Fraud Examiner (CFE). He has been employed as a CEO, Forensic Manager, Business Risk Consultant and Consultant for various companies and has experience within the automotive, retail and financial services industries. His clients or employers have included Imperial Consultants, Ernst & Young, Plan Personnel and ASDA. He has geographical working experience in Zimbabwe, Zambia and the United Kingdom. He speaks English and Shona. His service skills incorporate forensic advisory, risk management, enterprise architecture and ethics strategy.