Among the many battles raging around us, one that recently caught my eye is the one between the Sekunjalo group and a whole host of banks (hereinafter referred to as the ‘case’). It captured my imagination for more than one reason. For those not aware of this particular battle playing out on the South African business landscape, I have added a few links at the end of this blog, which should give you greater insight. In short, this is a story about a group of companies facing allegations of “malfeasance” in a commission of inquiry report, and banks deciding to close the bank accounts of the group, citing reputational risk to themselves. Effectively, this makes it impossible for the business to continue as no business can operate without a bank account. The chairman of the group has turned around and accused the banks of collusion and basing their decision on a discredited commission report and flawed media reports. Two interesting caveats in the mix are a) negative media reports are mostly generated by competitors – the group also operates in the media space; and b) the chairman of the group has pointed to racism as one of the root causes behind the alleged collusion – a serious issue in South Africa.
Before I jot down another word, I need to clarify that my intention is not to analyse the case and draw any conclusions on the various allegations or their merits. I have been around long enough to know that often nothing is what it seems and that one should take media reports with a pinch of salt, especially when rivals are throwing mud at each other. The truth is sometimes somewhere in the middle, or completely absent. However, in my mind, there are some interesting psychological and ethical issues at play that make for some thought-provoking conversation. This blog therefore uses the case as a backdrop, but only insofar as it provides concepts that don’t enjoy enough discourse in the context of business and industries.
Let me start with the allegation of collusion among the banks. This is an allegation the banks have denied, and which the accuser has in his view addressed in the Equality Court papers and Competition Tribunal of South Africa. The word ‘collusion’ has its roots in Latin. The Latin prefix col-, meaning “together,” and the verb ludere, “to play,” come together to form collude. The related noun collude has the specific meaning “secret agreement or cooperation.” (Mirriam Webster dictionary). The Collins dictionary defines collusion as “to act together through a secret understanding, esp. with evil or harmful intent”.
On the face of it, it seems clear that there would need to be a conversation of sorts to reach an agreement to cooperate. The question that is plaguing me however is whether the need for a verbal conversation or written agreement is necessary to enter a collusion. The direct translation of the Latin collude would be “to play together”. Could you have two or more players playing together without any meeting, secret or not, and without a verbal or written agreement to cooperate? The obvious answer seems to be a definite ‘no’, but I’m not sure that would be true.
Imagine for a minute a room full of well-dressed individuals with expensive jewellery and tech devices. Everyone is engaged in deep conversation in their respective groups of interest, and nobody is concerned about security. After all, the room is well guarded by one of the best private security companies in the city. There are however two exceptions. Two individuals who blend in, but if anyone were to watch them closely it would be apparent that they are not as engrossed in conversation as everyone else. To the contrary, they seem to be moving from one group to the other at a much faster rate than anyone else in the room. Interestingly, they are completely unaware of each other. That is until one makes his first move and deftly picks a woman’s wallet from her bag which she had carelessly left open. Coincidentally, he does this pickpocket trick in the same group the second individual had just joined. It takes one thief to recognise another, and as their eyes lock the thief knows that he had been caught in the action. But, just as sudden as his heart rate picked up speed, he utters an inner sigh of relief. The other person’s slight smile and subtlest of winks set him at ease. They are in the same game. In order for both of them to complete their missions, they must keep the other’s secret, perhaps even cover for each other if it comes to that. And so, a collusion is born. Not a word uttered or written.
The same story could easily play out in a bigger context such as an industry. Signals in the industry could easily be picked up by those who smell a prey and so a hunting pack is born, without a word being uttered. An incident I recently became aware of cemented this for me. An organisation contracted with a construction company to refurbish one of its buildings. At some point a fallout occurred and the two parted ways after a messy battle. When the organisation tried to find another construction company it quickly found out that the industry had erected an impenetrable iron wall. Nobody is prepared to engage with what they had labelled an errant customer. There seems to be no written agreement between companies that would ordinarily be rivals, but a practice has developed in which a disagreement with one would result in an organisation being blocked in its refurbishing needs. In some way it could be argued that the industry is acting like a gang, colluding to ensure that clients always toe the line. Collusion can therefore take the form of rivals synchronising their actions to the advantage of the industry.
The other concept that this case brought to mind is groupthink. Generally speaking, we commonly use the term groupthink only in the context of teams such as when an executive team has to make a crucial decision. This case has however made me wonder whether we are having any conversations about groupthink in the context of industries. Same could be said of professions. Can you go into groupthink with others if you are not in a team? The more I think about it however, the more I wonder whether we are not using the word “group” in “groupthink” too narrowly. If we were to look at any industry, we tend to look at rivals in the same space, but they are a collection (group) of companies with the same or similar interests. A group that may from time to time cooperate for their collective survival or overall benefit. For example, it is not uncommon for industry groups to work together in lobbying for their collective interests. In the case where their interest would be at the expense of others, some could argue that they are colluding (playing together with harmful intent).
On the face of it, based on the claims of the banks, they had all come to the same conclusions more or less at the same time. That is entirely feasible if the information they were all drawing from had set off the same alarm bells. It is quite feasible that the alarm bells ringing in one would set off a chain reaction in the others once the ringing of those bells had been made public. That would not necessarily point to collusion, but questions could be asked about whether groupthink is in play when there is action in unison. The outcome of groupthink is essentially when there is consensus without critical evaluation wherein controversial issues and alternative solutions were avoided. The groupthink model of Irvin Janis, a Yale psychology researcher, which I draw from, is one of the most widely used. In it he describes eight symptoms of groupthink:
- Illusion of invulnerability leads the group to overconfidence/optimism and ignoring clear signs of risk.
- Collective rationalization in which the group discounts and discredits negative feedback and advice from the opposition.
- Illusion of morality which can lead to the group members ignoring the ethical and moral consequences of their decisions.
- Stereotyped views of others who give different opinions and are considered too stupid or weak to handle the problem.
- Pressure on anyone who opposes the idea, decision or opinion favoured by the majority.
- Members of the group censoring themselves when they have opinions opposing the majority of the group, minimising their doubts and opinions to themselves and not expressing their dissent or concerns to the group.
- Illusion of unanimity due to the false assumption that anybody who doesn’t give an opinion is in unanimity with the group’s decision. Silence is taken as consent.
- A few group members taking up the role of mind-guards to protect the other members of the group from excessive information and facts that might destroy the majority decision. They stand up to prove the information wrong and label them stupid.
It stands to reason that these symptoms can manifest in the context of an industry and is not confined to the internal workings of one organisation. One just has to gaze over history and look at corrections industries had to make to practices that prevailed for long periods of time without anyone questioning them.
The third concept the case had me chewing on, is the unbridled collective power in some industries that can quite easily be abused intentionally or inadvertently. I include inadvertently because I do think that there may be cases where abuse of power stems from a weak application of mind. For example, where a group has fallen prey to an illusion of morality, it can convince itself that its actions are noble and altruistic, and the use of its power is in the interest of the greater good. When viewed through correct filters, that use of power may very easily be reinterpreted as abuse of power.
For me, an important yardstick in assessing ethical implications is the ability to demonstrate that there has been a deep application of mind of who will be affected, how they will be affected, and where unjust adverse implications are on the cards, how those negative effects would be mitigated against. When organisations or a collection of organisations work in their own interest without considering the ethical implications of their decisions and actions, the ripple effect on society can in the long run be adverse and severely so. It is therefore important that the social contract between society and those organisations be fair, guarded and result in consequences whenever there is a breach.
In this case I keep on asking myself the question: Should banks have the power to close bank accounts without accountability? The argument each makes is that individually they all have the right to choose their clients. However, when the collective adopts a cancel culture and essentially makes it impossible for an individual or organisation to legitimately operate in the economy, that collective has a power that should ideally not be unbridled. We should not stare ourselves blind against a stereotype that is an ‘other’ and think that the rest of us are immune from being affected in the future. Once precedents are set, they are difficult to reverse. If anyone is to decide that an organisation is to be stopped from operating in the economy, should it not be the courts that allow for a process where the company or individual in question can defend themselves? Or perhaps a regulator? Who ultimately makes that decision? Surely not the same people who have financial skin in the game, where there is plenty of room for conflict of interest? While the case puts the spotlight on the banks, it probably is an opportunity for us to reflect on where there may be room for deeper application of mind around power, and in particular within industries that have a profound impact on how we organise ourselves as a society.
As mentioned earlier in this piece, when it comes to this case, I do not know where the truth lies. I do think however that it provides us all with opportunities to reflect and have deeper conversations about what an ethical social contract looks like and what we expect from those decision-makers who have the power to fundamentally change the landscape we operate in. It provides us as leaders with the opportunity to take stand back and self-reflect. Is it possible that I may be guilty of participating in groupthink? Is it possible that I may be inadvertently colluding with others at the expense of society or the vulnerable? Is it possible that I may be guilty of participating in abuse of power? These are all powerful questions, but they are only as powerful as we are willing to resist going into self-protection mode, and be brutally honest with self.
Links to background reading:
Commercial banks tear into Iqbal Survé’s claims of c… (dailymaverick.co.za)
Competition Tribunal told how banks ’systematically’ closed Sekunjalo group accounts (iol.co.za)
