The ACFE’s mentoring program is going into its second round shortly. A quick scan through their database tells me there are currently no mentors in Norway, Sweden, Iceland, Austria or Denmark other than myself. Around ten mentors are available respectively in Germany and the United Kingdom, just a handful in Switzerland. Yet, the requests of mentees keep dropping in despite the system already indicating that I am at “maximum”.
Over the duration of the program, that is a period of six months, those accepted mentees will work with me. Others, I will attempt to mentor in alternative ways. For instance by encouraging them to use the association’s forum for more general discussion or anonymised requests that can tap into the wisdom of the crowd.
Just as when I embarked on the first run of the program, I have requests from around the globe. It is fascinating to see the diversity of cultural background, professional level and skill set and the specific requirements for mentoring. I am also intrigued to learn that professional and highly educated mentees frequently need a combination of mentor, coach and consultant rather than a mentor per se.
The initial task is to clarify and negotiate what guidance I can provide and where the limits of my engagement are. Communicating across cultural contexts, timezones and professional boundaries can be inspiring, energizing and great fun but it is neither easy nor always smooth, I am aware of that.
Establishing trust and a comfortable tone that allows for strengths, weaknesses, hopes and plans to be shared by the mentees is paramount to me. I know it all depends on how comfortable we become in a fairly short period of time to open up and discuss meaningful goals. There is no guarantee and I need to be skilled in reading in between the lines, raising questions, concerns and potential needs in a diplomatic manner. If I fail to adhere to this set of my own standards, I will encourage the mentee to communicate any frustrations in time.
Having been a mentee myself, I know that this is not necessarily the standard approach. Mentees may find themselves accepted quickly but then ghosted, weeks or months without engagement. Mentees may find a mentor having harsh ideas about imparting knowledge, instructing rather than developing and some may cross some borders.
But then, learning from less than best practice has always been valuable to me. I am committed to offering the best of what the good mentors have instilled in me. I know that the better I do my job as a mentor, the higher the chances the mentee will pass this on once they are ready to mentor others.
Once we are at that stage of trust within the mentoring relationship, I offer value by challenging respectfully where required, guiding gently with ideas and suggestions and a pace that is in line with the mentee’s requirements. I still allow the mentee to feel they have full ownership over the process and in fact that they do own the outcome.
Ownership is a much-underestimated aspect. Both, in the world of risk management and corporate compliance as well as in political governance. I know how important it is not to impose, but to develop in collaboration and by permitting and maintaining a sense of authorship and ownership. It applies to risk policies, constitutions and work procedures just as it does to one’s career steps, professional narrative and decision-making processes.
My goal is to empower, to enable and to help the mentee grow. As far as possible I want to achieve this with the mentee in a partnership based on equality. This is an approach I have learned to value highly over the years and it is a way of dealing with each other that I have come to appreciate mainly in the Nordics but also to a substantial degree in the UK. It is an exciting way of accompanying someone’s professional journey. It is also deeply inspiring to see what empowering others can achieve and what developing skills in tandem can instil, both, in mentees and mentors.
For all those who were unable to attend the sold-out ACFE Europe conference in Frankfurt a.M., see my earlier post , a number of posts by ACFE staff covering the sessions and keynote speakers as well as a summarizing video with comments and impressions are now available.
… rendered ineffective by socio-psychologically savvy fraudsters – are at the core of my forthcoming talk at the ACFE Conference in Frankfurt a.M. The invitation to hold a session has prompted me to focus on Germany’s “hidden champions”, its famed Mittelstand.
Those over 3 millionSmall and Medium Enterprises (short SMEs) have come under increasing and severe pressure from foreign direct investment (FDI), mainly from China but also in the form of European and North-American mergers and acquisitions (M&As).
Frequently marked by hierarchical and even patriarchal structures, sceptical of progressive whistleblowing and informant practices and approaches thanks to its history, Germany’s SMEs have suffered substantial losses and remain fairly resistant to lessons-learned, resulting from fraud committed by social engineers (Business Email Compromise or BEC, also CEO-Fraud or Chef–Trick) that continues to balloon.
Fraud, frequently conceptually misunderstood as an exclusively external phenomenon urgently requires more attention and a better grasp in terms of scope and depth (i.e. covering holistically the aspects of Wirtschaftskriminalität, Betrug and Missbrauch of resources, data etc.). It finds fertile ground in an organizational culture of fear in particular where:
speaking up and speaking out are equated with insubordination,
creativity is the privilige of certain departments, functions, individuals or hierarchy levels (or even demographics) and
social compliance dominates every action in the organizational routine.
These unhealthy parameters provide the perfect conditions for fraudsters who understand to read the obscure and subtle signs (or absence of such) of victim organizations.
Mitigating this fraud risk (and related reputation risk) and effectively tackling this wide-spread and potentially existency-threatening dilemma is not what most SMEs believe it to be: the current dominant knee-jerk response of staff firing and shame-driven hiding of failed (or barely existent) risk cultures is only adding power to fraudsters – thereby benefitting foreign investors and competitors.
Instead, smart empowering and effective risk strategies can leverage existing functions but require radical rethinking and a thorough understanding of the socio-psychological factors that cannot be engineered on paper into Germany’s SMEs.
Overcoming fear and building trust across functions are central to this type of progressive and sustainable immunization. Transparency and non-authoritarian leadership styles are key pillars in building this type of risk resiliency.
Conference attendees will have full access to my paper including appendix and references and the slides.
It provided a wonderful opportunity to reflect deeply and express my gratitude and appreciation for the many influences, challenges, and discussions over the years in academic, situational and professional settings. Not to forget the personal encounters, remarkable projects, and support I experienced and that underpin my motivation in fostering a better and broader understanding of fraud risk, effective controls, and applied ethics. Of course, it’s also a statement of deep appreciation for the ACFE organization and its members and an encouragement to share knowledge and mentor others in order to strengthen the professional community. Below the introductory paragraph compiled by the editors:
Britta Bohlinger, CFE, MA, BSc (Hons), Quality Manager and Auditor (IHK Berlin), founding director of RisikoKlár, is no stranger to debates or uncomfortable discussions. From a young age, she enjoyed lively conversations with her father about his work and later became active in academic association discussions. She said, “The element of informal mentoring was invaluable — a source of motivation, challenge and aspiration. [The discussions] were also a source of comfortable discomfort as being an active member always reminded me of how much more I needed to learn.” As the only female CFE in Iceland, she now brings her passion for discourse and spreading risk management knowledge […]
and the list of questions I answered:
How did you first become passionate about fighting fraud?
What is your current role and what does it entail?
What caused you to start RisikoKlar?
What is one of the biggest lessons you have learned since becoming a CFE?
You’re very active in the online ACFE Community. In your opinion, how important is the exchange of ideas and knowledge between anti-fraud professionals?
What is a memorable case or project that you have worked on; one that made you feel especially proud?
How has earning the CFE credential benefited your career?
What do you like about being an ACFE member?
What activities or hobbies do you like to do outside of work?
Employees, who spare no sacrifice to report their organizations to competent judicial and/or administrative authorities because of the heir illegal activities, are widely appreciated by the public opinion in this day and age. According to the detailed information contained in the ACFE Reports to The Nations on Occupational Fraud and Abuse, the most common fraud detection method is tips from employees and some other parties such as customers or vendors when it comes to the financial crimes.
Whistleblowers come forward publicly when something illegal is going on in their organizations after they do not receive an acceptable reply through their organizations. This situation causes the risk of retaliation against a whistleblower by the employer. For this reason, authorities take legal measures to protect whistleblowers from retaliation.
Other than employer retaliation, whistleblowers face the risks of industry blacklisting, professional violations, legal consequences etc. Therefore, employees should get a legal counseling to minimize or eliminate the risks of being a whistleblower before reporting an illegal activity to competent authorities. Section 806 of the U.S. Sarbanes-Oxley Act of 2002 (the SOX Act), which is titled as “Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud” states that reports must be filed with some specific authorities in order for the reports to be handled properly. These authorities indicated in Section 806 are:
a Federal regulatory or law enforcement agency;
any Member of Congress or any committee of Congress; or
a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct).
Otherwise, it will not be possible for the whistleblowers to be protected in accordance with the provisions of the SOX Act. A case which occurred in 2007 (Los Angeles Times, Two auditors not entitled to whistleblower protection, court rules, 4-May-2011) can be given as an example to the importance of legal counseling. The case involved two internal auditors assigned to assess Boeing’s compliance with stricter financial reporting regulations and safeguards imposed by the Sarbanes-Oxley Act. The two were fired after the Seattle Post-Intelligencer carried an article on July 17, 2007, headlined “Computer security faults put Boeing at risk.”
The story said Boeing had been unable for the previous three years “to prove it can properly protect its computer systems against manipulation, theft, and fraud.” These two auditors, Matthew Neumann and Nicholas Tides were not entitled to whistleblower protections because they leaked the information to a newspaper instead of the appropriate authorities indicated above.
Boeing legally fired Matthew Neumann and Nicholas Tides for the reason that they violated Boeing’s Company Principles:
PRO-3439* prohibits the release of company information to the news media without prior review by companies’ communications department
PRO-2227* considers information protection and
PRO-1909* considers companies’ reputation and its relation with the elements of business environment such as customers, creditors, and shareholders.
This case proves the importance of legal counseling in whistleblowing issues.
SILVERMAN, Circuit Judge:
We hold today that by its express terms, the whistleblower provision of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A(a)(1), protects employees of publicly-traded companies who disclose certain types of information only to the three categories of recipients specifically enumerated in the Act—federal regulatory and law enforcement agencies, Congress, and employee supervisors. Leaks to the media are not protected
*Source: Tides and Neumann v. BOEING appeal of 2011 (13 pages, section OPINION)
National and international aspects:
The headlines and underlying cases are indicative of the complexity of cross-border transactions in a globalized world where legislation, regulation, and enforcement still remain largely a national matter. Further significance has been added by the recent conflict of interest breach at the Bank of England, resulting in the Deputy Governor’s resignation. The ongoing prolific debate around conflicts of interest in the current US White House (visualized web ) has additionally furthered public appetite for scrutiny and clarity byeond national confines and territories.
Spanning Britain, Germany, Iceland, the European Union (EU) and EEA (European Economic Area), as well as off-shore tax havens in the British overseas territories, taking a birdseye view helps to understand and illustrate the challenges resulting from a broad network of anti-money laundering regulatory provisions and policies.
“EU legislation requires that institutions adequately manage and mitigate operational risk, which is defined as the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events.
Operational risk includes legal risks but excludes reputational risk and is embedded in all banking products and activities. It has always existed in banking, and non-banking organizations but it has acquired a greater relevance given the increased complexity and globalization of the financial system and the recent materialization of unprecedented extremely large losses.”
Conducting required checks and ongoing monitoring and registry maintenance sufficiently, requires both, the buyer’s and seller’s concerted efforts in order to mitigate and manage risk emanating from improper or inadequate due diligence.
The complex landscape of regulations and guidelines:
Britain‘s exit from the EU will leave its leading role in anti-money laundering (AML), anti-corruption (and anti-bribery and sanctions compliance) mostly intact thanks to the UK Bribery Act which is independent of EU regulations. Of greater concern is the stricter control of offshore territories, mainly in former colonies, as well as compliance regulation, applicable to financial firms, which is predominantly derived from EU legislation (OECD concern).
Iceland, as a member of the European Economic Area (EEA), has to comply with the EU regulations and its interpretations of the Financial Action Task Force (FATF) standards (Iceland in FATF). This scenario could also apply to Britain, depending on the outcome of future negotiations, for now, Britain remains a member of the FATF.
The European Union’s 4th Anti-Money Laundering Directive (4AMLD – summary) was adopted in May-2015, became effective in Jun-2015, and its national transposition is required by 26-Jun-2017.This will entail central registers of beneficial ownership as already set up in Ireland but currently not yet in place in Germany (see the Beneficial Ownership Transparency – Country report, 2015 – for in-depth analysis).
Knowing which rule, regulation, and watchlist apply:
Conducting checks is time-consuming, resource-intense and it may be costly. However, failing to thoroughly substantiate the identity of a customer or UBO (buyer, seller, business or other transaction-partner alike) may be significantly more costly and damaging to the reputation and funds.
“Risk, I had learned, was a commodity itself. It could be canned and sold like tomatoes. Different investors place different prices on risk. ”
(Michael Lewis, Liar’s Poker, 1989)
Outsourcing the checks may be one option but ultimate responsibility may remain with the outsourcing party – as the case of Karen Millen’s tax evasion scheme around-the-world (see EU Parliament Library note on corporate tax avoidance) demonstrated. A list of significant failures of duty of care in this regard is available on the UK’s Financial Conduct Authority site (FCA).
Knowing when to conduct checks: Certain types of risk cannot be insulated, transferred, or legally sold. Due Diligence (and Enhanced DD: EDD), Know Your Customer (KYC), Conflict of Interest (COI), and Ultimate Beneficial Ownership (UBO) regulations and rules are neither effective nor meaningful past the event, which does not render them obsolete but makes their use all the more valuable as a set of preventive instruments throughout the interaction. Compliance programs and efforts have become increasingly sophisticated, however, human factors such as misplaced bias, trust, unquestioned routines, and practices may enhance the operational risk.
“Let me put it this way: I’m standing in front of a burning house, and I’m offering you fire insurance on it.”
(Jared Vennett explains Credit Default Swaps (CDS) in M. Lewis’ The Big Short: Inside the Doomsday Machine, 2010/2015)
Latent reputation risk and litigation risk may arise instantly, at a very early stage during negotiations. This may apply irrespective of the nature of a transaction, whether an acquisition, a merger or a sale of a specific stake.
It requires due consideration and pro-active mitigation at a time when there is neither smoke nor fire, a long-term approach that may be deemed a challenge in environments where accounting for long-terms risk conflicts with short-term objectives. Adhering to ethics codes voluntarily may be one way to address the issue, voluntarily applying EDD can be yet another.
Overall, it can be argued that transparency of data, consolidation of watchlists, regulations, and enforcement efforts are increasing and increasingly streamlined, consolidated, and subject to public awareness and debate.
Korruption in Germany and corruption in the US – an interesting analysis that raises questions as to cultural differences, connotations and the role of the media: “This is perplexing. What explains the mismatch between the popular narrative that there’s been a surge in public concern about corruption?”
Sometimes it feels like corruption has become the topic of the year: We’ve heard repeatedly that it is (the perception of) corrupt elites that has fueled the rise of populists, nationalists, and new socialist parties and politicians. The most prominently of these, though not the only one, is Donald Trump, who promised in his campaign to take back power from the corrupt elites (see here and here).
But has the topic of corruption actually become increasingly prominent in popular and media discourse over the last two years? To investigate this question, I did a simple search on the Factiva database within the eight most widely-circulated American newspapers (USA Today, the New York Times, the Wall Street Journal, the Los Angeles Times, the New York Post, the Chicago Tribune, the Washington Post, and Newsday) for the term “corruption.” I did a…
In a recent interview, I talked about internal controls and ethics and referred to Wells Fargo as an example of the implementation of a Code of Conduct which did not result in the desired ethical behavior.
The reasons, as far as I have been able to observe and analyze are complex, far from obvious and even counter-intuitive. I believe we require a much better and more holistic understanding of the power dynamics, the collective unconscious and the interplay between individual-peer-community dynamics and pressures, sector and industry practices and the national society as well as the global. This applies especially to transnational corporations and cross-border operations where cultural aspects further add to the complexity and potential failure of a Code of Conduct.
The main reasons why an Ethics Code or Code of Conduct, even if fully embedded, rolled out and vigorously communicated, fails to bring the desired change, center strongly around the following:
Tone at the top (set by CEO or the entire C-suite) mismatches tone at the middle – long-serving middle management has its own practices;
Expectations at the top (C-suite, Board but also shareholders) remain profit-focused, no shift towards a greater paradigm shift gets underway;
Ethical behavior is mainly valued as reducing litigation risk (and costs) but not valued as profit-generating;
Compliance and risk departments are seen as non-profit generating, no counter-narrative from the C-suite is offered/communicated;
Weak internal controls including weak HR division are impacting internal whistleblowing and act as a deterrent (rather than deterring misconduct).
Ethics and the Code of Conduct are being mocked by (long-serving) middle-management as something that will pass as so many initiatives before;
Code of Ethics is coupled with zero tolerance – correctly interpreted as unrealistic;
Acting ethically may be deemed “nice” and interpreted as weakness rather than a strength (by both gender) – this is usually even more so in industries with fierce competition and a glass ceiling;
Morality is not seen as in line with the Code of Conduct – ethics are understood as more abstract and deemed over the top;
Morality has been mainly lived and practiced by a (corporate and societal) culture of naming & shaming and scapegoating rather than embracing the messenger who delivers bad news before the event – shooting the messenger has been the norm.
Mechanisms and knowledge missing:
No, or no sound, internal crowd-sourcing platform or system to gather issues and reward those who point them out and provide potential solutions are in place – promised anonymity communicates inherent threats/risks to those who wish to protect the organization and name problems versus transparency of issues, discussed in open forums beyond the confines of a department which would indicate openness to fix rather than to blame;
Morality and ethics are wrongly deemed as inherent – they are not understood as learned, negotiated, agreed and practiced concepts, rather there is a lack of knowledge that they change in socio-historical contexts and are not universal per se;
Lack of respect and integration of experts in behavioral collective change – business consultants rather than social scientists shape the strategy and communication, resulting in a sense of rhetorical unrealistic exercise;
Lack of understanding that ethics cannot be imposed but need to be owned by the community of all staff at all levels – which is why crowd-sourcing can be such a powerful approach and which is why Volkswagen’s hierarchical structure played such a central role in the emissions scandal.
A history of severe misconduct with inability to replace all those previously involved (due to size of organization or else) may result in a Code of Conduct being circumvented by creatively finding loopholes (the role of legal professionals in this context is another issue);
Other main players in the industry are not embracing a Code of Conduct as strongly, resulting in a competitive disadvantage.
I believe this question is incredibly important and we need a deeper discussion as to why the implementation of Codes of Conduct continue to fail and/or don’t bring the changes we want and need to see as widely and sustainably embedded and practiced as they should. I also believe that ownership (at all levels) of any Code of Conduct plays an extremely important role but is often hugely undervalued and misunderstood.
Snap Inc.’s IPO has turned from hyped to sour in less than a week – NYSE: SNAP. I had already flagged some concerns with the company’s valuation and potential issues as to underlying metrics which were, according to the lawsuit linked in my previous post, alleged to be fraudulently inflated.
There has been much debate across various media channels as to the underlying metrics which informed the calculation of the valuation. However, goodwill remained unmentioned. While notoriously hard to value, it deserves more public debate. In particular so, as in the case of Snap Inc.’s going public the goodwill valuation shows a significant increase from 2015 (USD 133.9 mn) to 2016 (USD 395.1 mn), see p 35 in SEC Statement under The Securities Act 1933 where Snap Inc. states:
If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings, which could seriously harm our business.
Under U.S. generally accepted accounting principles, or GAAP, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. As of December 31, 2016, we had recorded a total of $395.1 million of goodwill and intangible assets, net related to our acquisitions. An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Any such material charges may seriously harm our business. [emphasis added]
The quick return down to earth may not come as a surprise to those who refrained from investing and held a critical view on the corporate governance issues and Snap Inc.’s business model. But those among the public investors who hoped for sustainable profit may have had a rude awakening.
Some argue that a segment of the investors confused popularity with profitability. Looking beyond the hype and one’s personal preferences should be part of due diligence every potential investor invests in – as a tool of damage control and sound risk management practice, before the actual investment. Conducting this due diligence with respect to goodwill valuations and the choice of metrics underpinning the overall valuation is a challenge, though.
It helps, especially when it comes to tech stock or unicorns to keep a set of questions in mind, coupled with a few considerations that should guide the investor’s evaluation. Goodwill valuation, its challenges and the particular risks embedded in the metric that is prone to bias and often deemed an art rather than fact-based science, is equally important and difficult to assess in terms of accuracy.
For the purpose of understanding a whole range of motives, pressure and influencing circumstances that may inflate a valuation underpinning the going-public of a tech company, the following questions and aspects should be kept in mind:
Generally speaking, the industry’s standard needs to be taken into account – keeping in mind the dot-com bubble during the late 1990s and the related history of very short track records coupled with thin profits.
A key concern is and remains the fact that underwriters, such as large investment banks, charge considerable fees. Up to 6-10% of the capital raised in theIPO are due and represent a considerable lucrative incentive, making this a non-deferred reward system prone to fraud.
How do underwriters make their money? A bank or group of banks put up the money to fund the IPO and ‘buys’ the shares of the company before they are actually listed on a stock exchange. The banks make their profit on the difference in price between what they paid before the IPO and when the shares are officially offered to the public. Competition among investment banks for handling an IPO can be fierce, depending on the company that’s going public and the money the bank thinks it will make on the deal. (CNBC explains:IPO)
CEOs and CFOs are disproportionately frequently involved in financial statement fraud (underpinning the valuation), this is largely enabled due to their position of power, status and related access to systems and coupled with particular pressures and expectations that these roles entail.
The pressure and common reasons senior management cite when caught overstating their financial statements include (a) compliance with loan covenants, (b) meeting and exceeding earnings or growth expectations of stock market analysts, (c) showing a pattern of growth to support a planned securities offering or sale of the business, (d) meet personal or corporate performance criteria – to name only the most prevalent ones in this context (see Forensic Accounting and Fraud Examination, 2010, Wiley, by John Wells, Mary-Jo Kranacher, and Richard Riley).
Taking the figures at face value is not advisable, frequently footnotes and disclosure notes might indicate deviations from generally accepted accounting principles (GAAP). Despite standards, guidelines, and rules, it is vital to keep in mind the subjective nature of book- and record-keeping. Differences in judgment can result in significantly differing valuations. To illustrate:
.5 Fair value measurements for which observable market prices are not available are inherently imprecise. That is because, among other things, those fair value measurements may be based on assumptions about future conditions, transactions, or events whose outcome is uncertain and will therefore be subject to change over time. The auditor’s consideration of such assumptions is based on information available to the auditor at the time of the audit. The auditor is not responsible for predicting future conditions, transactions, or events that, had they been known at the time of the audit, may have had a significant effect on management’s actions or management’s assumptions underlying the fair value measurements and disclosures.
source: AICPA (American Institute of Certified Public Accountants) Standard Audit Test AU00328 and VS Section 100: Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset
The personal, the societal, the international When thousands of Icelanders, expats, tourists and exchange students gathered in a memorial walking, the temperatures well below freezing, the mood was calm, quiet and collected. Participants united in a walk towards the point where Birna Brjánsdóttir had last been seen – by public cameras – to place flowers and candles at this spot, and at Arnarhóll, Reykjavik’s historically, culturally and geographically central hill.
Role of community: Gemeinschaft, cohesion and cultural norms
Community and collective effort in this extremely rare case of violent crime (Iceland’s remarkably low crime rate, OSAC report 2015) have been enormous. The search-and-rescue operation for missing Birna, had been similar to those in the more frequent events of lost hikers, which entail considerable and concerted collective efforts. Here in Iceland, the planet’s most peaceful nation‘s police officers carry no firearms, the military budget constitutes 0.1% of the GDP and the country has no national military force or army. That makes the significant and effective role of civic engagement and community become even more obvious. While Icelanders may deem this the national norm, anyone who grew up elsewhere or lived in a society that is marked by more fragmentation, separation, anonymity and lack of cohesion will have been touched by the quiet power of what German sociologist Ferdinand Tönnies coined Gemeinschaft. Outsourcing of certain tasks and relying predominantly on or even exclusively on professional specialists is not an option. This may be rooted in the geographical location and historically resulting from a strong sense of interdependence in a harsh climate and ever-present risks thanks to volcanic activity and other natural forces.
Violent and white-collar crime in transnational communities
The investigation of the violent crime has brought the aspect of community involvement to international audiences, the attention not least resulting from sustained all-time high interest by tourists. As mentioned in my previous article on tourism risk in Iceland and its characteristic two-way nature, the tragic loss of a young Icelandic woman raises awareness of usually much less visible links.
Iceland’s culture, informal norms, and practices show how civil society and community engagement encourage thought-provoking participation also in temporary visitors and those abroad, those who are maintaining an interest from the distance by the help of conventional and social media.
We also see how crime transgresses national borders. It transfers from one nation, one island to another – in this case via the Greenlandic seafood trawler Polar Nanoq which had a substantial amount of drugs on board. We may notice also how little known and understood Greenland’s societal issues are beyond the confines of the Nordic nations, and Nordic co-operation, such as the Arctic Council’s activities (2016 Assembly, panel on mental health issues). Greenland, not a member of the EU or Schengen Area, as the Faroe Islands, is subject to Danish authority, which includes border control issues, and immigration into Greenland.
The painful violent loss of a young woman’s life helps us further understand the vital role of community and civil society in resolving and preventing crime. In this sense, the police investigations, so far, have highlighted some interconnected aspects, such as:
the links between violent crime and white-collar crime:
transnational drug trafficking tends to involve money laundering (of proceeds) as well as subsequent tax evasion, bribery (of various officials in the process of transnational drug smuggling) and document fraud.
Civil society engagement in both nations, Iceland and Greenland, at this time of shock and grief, have shown that the response and engagement of the wider society are absolutely vital in awareness-raising. The resulting and ongoing discussion of meaningful ways, responses and mechanisms are central to effective prevention of future crimes, whether in Iceland or Greenland.
At the time of writing the case is still under investigation and a final report of the findings has not yet been published.
Tourism a hundred years ago or so used to be totally different from what it is nowadays. My maternal grandparents then also were no strangers to relocation and re-rooting. They enjoyed travel thoroughly and up into their old age. But their trips used to be longer – actually quite long, spanning often three, four or more weeks at a time. They immersed themselves and stayed in one place. Their idea of holidaying was remotely resembling an anthropologist’s or ethnographer’s project, when the researcher “is going native” – which is a balancing act as they may lose objectivity. Suffice to say, my grandparents had a rather strong influence on what I would become…
As a result of very low airfares, seasonal collective escapism and the pressures of impression management, we see nowadays something that could be called fast food-style tourism. Extended weekend trips, or even just a fifty hours visit, especially now at the year-end period, are becoming ever more common.
The Icelandic króna’s strength certainly contributes to this phenomenon. Our weather here frequently welcomes travelers with wind speeds of 40-60 km/h which add to the issue. Travelers tend to want to remain sheltered but enjoy the scenic views. Hiring the obligatory 4×4 and going on a selfie spree on moss in Icelandic lava fields seems a – sort of – natural choice.
Tourists may not find the time to consult their travel guide and read up on the less exciting section with rules and warnings if they actually purchased one in the first place. This is probably a by-product of being on some kind of budget and taking a short trip. In addition, many may assume that a nation as widely fluent in English as Iceland, is rather very similar in their values and customs. And this is where things potentially go wrong.
The legislation concerning off-road driving in Iceland is simple and warnings are issued in English, with hefty fines. The number of cases has been increasing, though, and keeps making headlines. Tourists have been found guilty of disrespecting and damaging the fragile nature by ignoring closed roads, by crossing rivers, and driving generally where they are not supposed to. Extremely quickly changing weather conditions and tourists simply underestimating nature’s power have probably been playing a part in those incidents too.
Communication becomes the key to understanding what appears so hard to grasp – all the taken for granted, the common sense that appears to be missing in foreign tourists who litter, trample down what’s precious to nature and locals and ignore the rules that come naturally to the locals. As often though, whether it is just a few “rotten apples” that give tourists a bad reputation in general or if it is a wider issue, perhaps even systemic, is not so easy to say. What seems to look like ignorance, arrogance, or inhibition thanks to being abroad and possibly intoxicated whether by alcohol, the scenery or else, is perhaps the root cause of this behavior. Again, this may be too simplified – but it is a common notion that shapes the discourse
Communication of values, expectations and boundaries is what is at the core of this issue. It could be argued that some of those may be reasonably assumed as shared across Northern European or even among Western industrialized nations. But it may be a rather a misleading assumption that would overly rely on simplifications.
From within a most popular yet also very vulnerable tourist destination, I found the way Iceland has been handling the matter very persistent and it remains a curious aspect that may lead to wider subtle changes also among those visiting. Iceland’s explicit encouragement to blow the whistle on misconduct is refreshing. A nation that comprises of only 337,000 residents, yet expects 2.5 million tourists in 2017 simply needs to source its own crowd, more than any other nation, it seems. It wouldn’t be the first time, as you may have heard, rewriting the nation’s constitution by sourcing the crowd (Stjórnlagaráð 2011 ) was an attempt Icelanders were willing to make.
Locals, and foreign permanent residents alike, are fond and respectful of the fragile nature and while the weather can be brutal, beating you hard with rain, hail, sleet and strong wind, persistent darkness or daylight – anyone who has been outside the urban borders, in the more remote mountainous areas knows that litter (including human waste) and footprints live on for a long time.
Communicating repeatedly – in English – that reporting misconduct to the police by noting the number plate and taking photos, is wanted and deemed useful. Identifying and reporting environmental violations is citizens’ civic duty. Underpinned by media reports of fined drivers, the media coverage highlights, in detail, where drivers have transgressed the rules and how they caused damage to the nature – which could be deemed a way to educate the global public on this specific topic.
In this matter, as often, Iceland shows a pragmatic stance with an absence of passive-aggressive behavior. Instead, the assertive approach sets clear boundaries and signals healthy collective self-esteem. Quietly confident, Icelanders know what they want to achieve. Absent from this picture are also the shaming and blaming, the lamenting and generalizing that can be found in some other countries – and tend to be counter-productive as they trigger predominantly resentment which is ineffective in the pursuit of actual behavioral change.
Culture certainly plays a huge role in handling and discouraging unwanted behavior and any attempts to discourage it or change the collective wrongdoing that groups of tourists may temporarily import. However, swift and consistently acting upon it, including reporting of fines imposed and meaningful actions taken by the police, such as community service imposed, are underlining the credibility and the sincerity of the approach. They leave no doubt that the population is vigilant and protective of its valuable nature, thereby increasing the effective deterrent of penalty to be expected by tourists.
Tourists may come from very diverse socio-economic backgrounds and nations, legislation as to environmental crime may differ widely. Their communities may place very different, perhaps much lower value on the nature, the natural environment, but also, perhaps on individual human beings as such. Some tourists may hold lower self-esteem, whether individually or collectively, they may indeed also hold lower self-respect and lack the sense of respect for nature that is so deeply ingrained in the Icelandic culture. This may not be changed overnight, nor by words alone. But these persistent actions speak louder and they may be one of the few long-lasting souvenirs that tourists take home, even if being fined for destructive driving is financially painful – and community service no glamorous fun – it may just stick.
The remarkable aspect is that this is no perfunctory act, not out of compliance with some imposed rule or piece of legislation by some regulatory or supra-national body that has been grudgingly implemented. Rather, it is out of authentic deep-seated understanding and appreciation of the way Icelandic nature works and human-nature interaction is lived and perceived, how many decades are required in order to grow and restore what has been destroyed in a mindless moment, the blink of an eye.
Objectively considered, it may strike many fastfood-style tourists as an odd thing -realizing that what they have come to see took that long and is that valuable. If their home is in a city that is scarce of nature and features human-built gardens and parks and very limited communal space, but an over-abundance of traffic and air pollution, too much artificial light and too little respect for genuine human needs, then it might be understandable, yet not excusable, that such behavior occurs.
The way this particular tourist misconduct is being dealt with is:
without blaming and shaming, but
swiftly and consistently and
appropriately for the purpose of restoration and as collective self-protective measure.
It is an attitude that I hope so see being exported and adapted in other nations. Reporting misconduct, fraud, corruption and other violations tend to remain negatively connoted, often deemed an act of betrayal rather than of deep loyalty and sense of duty. Instead of focusing on improvement and whistle-blowing as natural civic duty, reporting misconduct remains in many jurisdictions burdened with layers of bureaucracy, lack of efficient and effective judicial commitment as well as slow and ineffective law enforcement.
Who says that lessons learned from managing tourism risk and blowing the whistle on environmental violations can not be transferred to other areas and industries?
Following Iceland’s parliamentary elections on 29th October , the amount of international attention, support and scrutiny this event has been achieving is stunning. Far more, it seems, than the early presidential election was attracting, which took place on 25th June this year, in the midst of Iceland’s UEFA Euro 2016 success.
In particular, media coverage by the U.S., the British press and the German media is shaping public opinions. Depending on their audiences and political standing, the views range from fairly enthusiastic to outright pessimistic. Nations who have little or no experience with successful governmental coalitions color their coverage accordingly. A good selection of specific articles to gain a flavor in English and German has been reviewed and collected for this article: The New York Times, Reuters US, the Financial Times UK, the Guardian, Frankfurter Allgemeine Zeitung (FAZ), der Spiegel, die Zeit, Sueddeutsche Zeitung. Voter turnout figures can be accessed and compared to previous years via ElectionGuide and IDEA.
Below: Icelandic daily papers: spilaborg means Kartenhaus in German but its actual reference in this context is House of Cards.
In light of the fact that Iceland hosted about 1.6 million tourists this year and many of them have discovered or renewed their love of the nation, debates across social media are thriving. In addition, many individuals from pre-election North America. and post-Brexit Britain are declaring interest to immigrate, ask for details and clarifications in social media and take a keen interest in the government formation process.
With an informed estimate of 2 million tourists expected in 2017, paying attention to foreign voices and opinions here is vital. After all, Icelandic is not the language tourists tend to speak or understand. Salaries, wages and cost of living are often quoted in Icelandic krona (ISK), the local currency, with a rough estimate usually given in Euro or US Dollar. Unfortunately, foreign audiences tend to quickly jump to conclusions, failing to acknowledge that
the Icelandic living standard including aspects such as the minimum wage, taxation etc differ considerably from other nations such as the U.S. and Britain.
A nation’s reputation can be put at risk by mis-translations and misconceptions which in turn translates into expectations and assumptions incompatible with the actual reality. This in turn may translate into investment risk. In more detail:
A notion of Icelanders voting for an unstable governmental situation could potentially put off investors or pose risks to ongoing and new projects which rely on predictable policies, functional and effective governmental decision-making and dependable leadership. The ability to borrow at affordable terms (c.f. German Bonds), expressed in a nation’s sovereign credit rating, is central to its functioning in international markets. Iceland is currently rated A3 with stable outlook by ratings agency Moody’s – a rating that was only upgraded in June 2016 though (c.f. also Iceland’s Central Bank statement in English which does not yet reflect the latest change by Moody’s).
Forming a stable government and being perceived as able and willing to do so efficiently and effectively is not only important for the population of about of 332,000 people who have been enjoying the tourist boom as “a mixed bag” to quote a presenter at the Assembly of the Arctic Circle earlier in October 2016. Rather, it also plays a role in light of the approved lift of capital controls imposed after its three largest banks collapsed in the financial crisis:
“On 11 October 2016, Althingi passed a bill, introduced by the Minister of Finance and Economic Affairs, amending Act No. 87/1992 on Foreign Exchange. With the Act, which is part of the authorities‘ capital account liberalisation strategy from June 2015, important steps are taken to lift capital controls in full. Controls on resident and non-resident individuals and legal entities will be markedly eased in two steps; first upon passage of the bill on 21 October and second on 1 January 2017. […] Individuals are also allowed to purchase one real estate per calendar year and the requirement that residents repatriate foreign currency has been scaled down. On 1 January 2017, the aforementioned ceiling will be raised from 30 m.kr. to 100 m.kr. and transfers of deposits will be permissible subject to the same ceiling.”
Assumptions and mis-translations on the level of connotation rather than denotation belong to the most severe risks organizations and nations, but also individuals, can run. Actively communicating and managing the resulting misconceptions can be extremely difficult as the distortions remain often obscure, subconscious and seemingly minor.
However, they build up over time and as they become repeatedly re-communicated by large numbers they can solidify what would else have remained indeed a minor aspect of conversations uniting numerous non-native speakers. However, in countries where dubbing of interviews, rather than subtitling, is common practice and audiences are denied access to the original statement, conveying much more than just words, the power shifts towards what the media outlet wants its audiences to hear (c.f. the IceSave debacle most unprofessionally communicated in the British media, BBC newsnight interview ).
As nation, Iceland is fluent in English – predominantly but not exclusively – and versed with linguistic and cultural differences between British and American English as well as the underlying cultural specifics. Many Icelanders understand or even speak German and are also familiar with national perceptions and particularities.
The reverse does not necessarily apply, though. Icelanders, in light of their limited number, may be restricted in their efforts and capabilities to correct misconceptions and misrepresentations resulting from language barriers or foreigners’ misconceptions. Icelanders hold different expectations of their business partners and guests, harshly advising them on mistakes or erroneous assumptions is not part of the national mentality. Awareness building and capacity building remain challenges Icelanders will encounter with growing numbers of tourist and virtual visitors. Reputation risk may move up the priority list and gain a more prominent spot on the agenda, being more actively managed and valued as potential opportunity.