CIPS President Sam Walsh – Should He Stand Down?

We reported here on the issues engulfing Rio Tinto around a $10.5 million payment made to an adviser (François Polge de Combret) in Guinea. That adviser was close to the President of Guinea, and the firm actually reported themselves to the regulatory authorities, presumably because there might be a perception that the payment was on its way to the President and was linked to Rio trying to retain key mining rights in the country. Or another possibility is that the adviser was working for both sides with a conflict of interest. The Australian reports:

“Mr de Combret was at the time acting in a capacity that would have given him access to highly confidential information,” Guinea’s Minister of Mines and Geology Abdoulaye Magassouba said in an emailed statement. “It raises both legal and ethical concerns if, as media reports suggest, Mr de Combret was passing on privileged information in return for large amounts of money.”

The request for the payment to be made to the adviser was made by Alan Davies of Rio Tinto. It was approved by the divisional CEO, Sam Walsh, who passed on the request to the group CEO, Tom Albanese. Our interest of course is that Walsh has just started his tenure as President of the Chartered Institute of Procurement and Supply.

Since our first article, there have been further developments. Davies and Debra Valentine, the head of legal affairs, were fired by the firm, and Davies reacted angrily. He obviously feels the payment was legitimate; as we said previously, the world of “professional services” is full of cases where we might question the value for money and legitimacy of many payments, so he may have a case – is this really any worse than may other “consulting assignments”? Davies issued a statement;

“I have not been privy to Rio Tinto’s internal investigation report, nor have I had any evidence of the reasons for the termination of my employment given,” he said. “There are no grounds for the termination of my employment. Rio Tinto has made no effort to abide by due process or to respect my rights as an employee and it has given me no opportunity to answer any allegations.”

However, this puts CIPS and Walsh in a tricky position. Walsh has said nothing so far, and does not have to of course. For a start, he will have taken legal advice given that it is possible he will find himself in court one day. But that does not sit easily with his role as CIPS President. How can he speak at CIPS events and do anything publicly for the Institute whilst refusing to comment on the Rio Tinto issue? It would be the “elephant in the room” and put his own credibility and authority in doubt.

Or he might consider making a public and robust defence of his actions. In that case, we could see him fulfilling his CIPS duties, whilst taking the position that he did nothing that was improper, illegal or immoral. Indeed, that may be the conclusion of any investigations. But it is hard to see that he can just remain silent on these matters and remain as President.

Davies has also stepped down as a non-executive director of Rolls-Royce, saying he did not want this affair to impact that firm’s reputation. The same consideration should apply to Walsh and CIPS – when the Institute is taking a stand on ethics in areas such as modern slavery, it cannot feasibly have this hanging over it for the next 12 months.

So Walsh also needs to consider his position; we’ve thought about this a lot over the last few days and it seems to us he has a choice. If he does not want to comment on the Guinea affair, that is his absolute right. But in that case, he needs to stand down, perhaps only temporarily, from the Presidency, until matters are clearer or resolved.

Speak up or stand down, we suggest, is the choice that Walsh needs to make.

Voices (2)

  1. Gordon Murray:

    His position does appear untenable at the present – I hope he is able to speak out and give a justifiable account for himself. In the meantime though, how will he be able to represent CIPS at Branches, government, conference platforms and elsewhere with such a shadow cast over him. Sad thing is I seriously doubt if CIPS will even be concerned and if he is found to be directly involved whether they would take even the most basic action never mind disciplinary action. On a separate note – I scanned CIPS registered to see if he has completed the Ethical Procurement training and couldn’t spot him, strangely I couldn’t spot him as a member either, why is that – have I missed him?

    1. Final Furlong:

      Gordon (and Peter), anyone who works in Procurement needs to be ‘whiter than white’. Anyone who represents the profession, in any capacity, needs to be flawless, and be in possession of a flawless track record.

      Without our ethics and integrity, we are nothing.

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