In today’s world, the business of trust is failing. Trust is worryingly lacking in financial sectors such as banking and stock markets and has been violated in many others too.
As shown in the 2021 Edelman Trust Barometer there is an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world.
All of this is unsurprising given that since the 2008 financial crash, bankers have been the initiators of many frauds. Not only this, they have also practiced opportunistic and manipulative behavior.
The brokers at the hearts of the biggest markets in the world also show how trust in the world of business is failing, by acting in manipulative ways so as to benefit themselves yet hinder other investors and businesses. Furthermore, it has even been claimed that traders have created online forums to organize these actions called ‘the cartel’ and ‘the mafia’ and others of the like, in which one Barclay’s trader was said to have posted “If you’re not cheating, you’re not trying”. This only goes to show the levels of immorality such individuals and subgroups are willing to go to.
Paired with the fact that no one government agency is responsible for policing the currency market, leaving it up to committees, some run by banks themselves, to set guidelines, shows the level of power that can be abused by traders who are in a position which such a high level of systemic trust is bestowed upon.
Further examples include;
- Bankers representing JP Morgan and HSBC manipulated the stock market by making trades to systematically lower the price of silver;
- How two HSBC employees sent nearly $19,400,000 to Iran and provided finance to banks in Saudi Arabia and Bangladesh linked to terrorist organisations;
- How in March 2021 a Swedish court sentenced two men to six years and nine months in prison for having defrauded a Maltese pension scheme that lost millions in Swedish savers’ money. The prosecutors called it a “well-planned and systematic attack on the Swedish pension system” and are holding the men responsible for the return of millions in stolen cash.
All of these activities made substantial illegal profits and hindered other investors and competition, whilst at the same time having little consideration for the potentially dangerous implications.
However trust is failing not only because of its lack in the financial sectors as we have set out above, but also because of its violation in so many other cases in business.
You may remember some years ago, the Hatton Garden raids. Hatton Garden is a closed and secretive community of diamond and jewelry dealers who for decades have been said to operate based on unspoken laws of trust.
Purchases of merchandise are rarely recorded, in contrast the deal is sealed by the two parties saying the Yiddish words ‘Mazel und Broche’ meaning luck and blessing. This shows the immense inter-generational trust present in Hatton Garden trading for there is no paper trail.
However, this was all violated in an estimated £200,000,000 raid.
Most people would assume that a trade dealing with such high value goods would have extensive security systems but a former Metropolitan Police Detective says otherwise. In contrast to assumptions he says “From my experience this trade can actually be very complacent and think it just won't happen to them." Here we see that as a result of the trust within Hatton Garden, dealers neglected security measures which unfortunately in turn allowed the thieves to take advantage of this system of trust, as they were able to get past security systems that weren’t as strong as they should be as a result of traders believing that no one would betray them. Therefore for such well-established trust to be violated and exposed in such a high profile and criminal way it is difficult to see how this traditional system can still be used in the modern world.
However, in contrast to the old school nature of the Hatton Garden raid, where the thieves drilled through concrete walls in a scene such as you would find in a classic action film, another of the most common businesses that also violates trust is a thoroughly more modern one, e-commerce sites.
Since consumers using e-commerce and those who allow their details to be stored online have no face to face communication with the other party or control over their information, they have to trust the pricing, payment, description, photographs and levels of security provided.
However many criminals have taken advantage of and abused this level of anonymity and trust that is essential when using the internet and technology.
Criminals now partake in so many online frauds by assuming fake profiles or giving fake offers or descriptions and cheat customers out of their money. In many countries, online scams are now the most reported form of crime.
In Sweden, fraud was 5% of all crimes cases reported in 2000. However by 2020 it had risen to 17% of all reported crime.
How to ensure consumers can trust online information when it is so often now widely misleading, and can trust businesses with personal information when it is so often illegally accessed, is now one of the most pressing issues at the forefront of online business owners’ minds.
The Hawala system is another way in which trust in business is violated. Hawala is an ancient and casual system of money transferring, used in many eastern countries for many generations in which no money actually crosses any borders or are any legal documents involved, instead many swaps of cash are employed and users are only given a token to prove that money is owed.
However, this trust also means that there is no paper trail and that the system offers a high level of anonymity since transactions are fast and unrecorded.
The trust in this ancient system is violated by terrorists to whom this hushed up manner appeals to. The Organisation for Economic Cooperation and Development estimates that the cost of major terror attacks like the London bombings was no more than £8,100 which could easily be incorporated into the Hawala system, meaning international securities failed to detect these transactions and therefore stop the devastating attack.
Therefore by terrorists violating an ancient system based upon trust to stage devastating civilian attacks, this again shows that trust is no longer a valid foundation to base safe and just business upon for a system based upon it is far too easily neglected with truly devastating consequences shown by the horrific loss of life in such attacks.
Banks, bankers, stock markets and brokers have lost all our systemic trust and by the Hawala system, the Hatton garden raids and online commerce all showing the pitfalls of trust based exchanges, it is clear that such systems have been and are still being violated.
It seems ironic that the famous words on so many currency’s notes, “I promise to pay the bearer”, are rooted in concept of trust (for when a promise is made, the promisor invokes the promisee's trust), yet the wider international economic system within which said money circulates seems to have become so disconnected from this notion of trust.
With this growing trust gap and trust declines worldwide, people are looking for leadership and solutions as they reject institutions and individuals who they deem not credible.
In particular, CEO’s credibility is at all-time lows in several countries, including Japan and France, making the challenge for CEO leaders even more acute as they try to address today’s problems.
This mistrust, along with the ever rising wave of misinformation which surrounds us all, is threatening to all aspects of our lives, but there are ways we can all learn to shift the tide and set a more trustworthy tone in society as a whole.
In the next article we will take a deep dive into how we can all learn to re-cultivate trust in our own relationships, both personally and professionally, through coaching and mentorship. To find out more about our services in the meantime, explore our website or get in touch.
Written by Holly Thompson
Holly is a Chartered Accountant (CA) from Scotland with a background in external audit and prospects in forensic accounting. She also has experience in editorial and creative writing which she is putting to use during her time in Sweden. Look out for new blog posts, perfect for open and curiously minded individuals.