You are the Financial Controller of DevCon Limited (DevCon) a public company and a large national property developer for whom you have worked for five years. You have worked your way up through the organisation and are hopeful of a board appointment in the future. The board members turn to you for advice on financial and commercial matters regularly, and this has led to the development of close relationships with most of the senior team. The Chairman of DevCon, Sir Paul, formerly held high profile roles in Government and has been a very good appointment for the company. He has set very high professional and ethical standards for DevCon, and you have a good relationship with Sir Paul.

Today you are signing-off on invoices payable and settle down to do some sample checking. You spot a payment to CityPlumb Limited (CityPlumb), who does a lot of DevCons work on new-build houses and decide to examine the back-up paperwork. CityPlumb has also recently done work on the extension you had built on your family home. The extension was arranged and managed by your colleague, Will, the Construction Director of DevCon. The work was completed to an excellent standard and the price was a very good one, even if it has somewhat stretched your finances. To safeguard yourself from a possible ethics breach, you even had the Internal Audit manager check CityPlumbs invoice to ensure that the rates you were charged for labour and materials were comparable with the rates that the company pays. This had also been helpful to you in another way because CityPlumb had insisted on billing DevCon directly, giving you some additional time to make payment.

As it happens, the invoices making up the payment to CityPlumb which you are checking are for another piece of private work this time for DevCons Construction Director himself. With the papers is a copy of the invoice by CityPlumb to your colleague together with evidence of his payment. However, you are slightly puzzled as the CityPlumb invoices contain no mention of several items that you know were included from your last visit to his house such as the jacuzzi, the high-tech shower fittings and the digital musical system. Worried on his behalf you ask for the other CityPlumb invoices for this job, only to be told there are none.

While you are pondering this, the Construction Director, Will, arrives in your office. He asks what your query is on his extension. You explain and tell him that you are concerned and wish to protect him. He looks embarrassed and explains to you that he has known the owner of CityPlumb for many years and that the jacuzzi, shower attachments and the music system are a gift. He also hastens to reassure you that as he has no part in the tendering procedures (which take place every twelve months), no undue influence is involved. You explain the ethical issues involved and the conflict with the companys statement on ethical standards of behaviour in business. Will looks even more embarrassed and points out that you have also benefited from this arrangement, but that he had deliberately not told you so that you would not be compromised because you manage and supervise the annual tender process. In fact, Will added that several of your colleagues have, over the years, knowingly benefited from a similar arrangement, including the Chairman, Sir Paul.

You think the situation over. Personally, this is both a financial and professional embarrassment: you would find it hard to come up with the funds now, and it may be difficult for others to accept you were ignorant of the situation. It also potentially threatens your relationships with your colleagues. With the Chairman, it will be a particularly difficult matter to raise, given his stance on business behaviour. In addition, the tendering process appears to have been unaffected to date given your own involvement. You ponder the implications.

Q1. Recommendations your group would make for safeguards DevCon could put in place to ensure situations like this are avoided in the future?