KPMG partner: Good governance is key to protecting a company brand

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Businesses must protect their reputation by establishing good governance or risk destroying their brand, according to KPMG managing partner Neil Patterson.

Speaking yesterday at the weekly meeting of the Hamilton Rotary Club, Mr Patterson cited numerous businesses that had their reputation destroyed through unethical behaviour, including Enron, WorldCom and News of the World.

“That was a really strong brand in the UK,” Mr Patterson said of the News of the World. “That brand has disappeared from the market. That’s why we are careful about our brand.”

He said that there are many strategies that can be used to encourage and support ethical decision making in a business, but the most important factor is the attitude at the highest levels of the operation.

“The most important thing is the tone at the top. Do they walk the walk every day,” he said.

Other important elements include creating transparency in business dealings, establishing code of conduct with clear and rigorous policies, aligning promotions and compensation with ethical behaviour and constantly testing for compliance.

“There has got to be some teeth in the process to build that behaviour you need,” he said.

Mr Patterson said that business ethics are particularly important in countries like Bermuda because of the high degree of international scrutiny we receive from overseas.

“Over the last five or ten years we have had a lot of focus on the offshore world, people taking pot shots at the offshore businesses,” he said. “They get blamed very very quickly.

“Because we live in somewhat of a fish bowl where everything is scrutinised, it’s very important to do everything properly.”

While auditing companies such as KPMG play an important role, he noted that auditors rely on a company’s management to do their job.

Questioned about potential conflicts of interest between auditors and management in cases where the two work together regularly over several years, he said: “We see our clients as not being management, but the shareholders. We need management’s assistance and help, but we are reporting to the shareholders.

“We are not perfect, but that’s what we aspire to be when we do our business. At the end of the day, it’s all about reputation. If you make a mistake, it can ruin your brand.”

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