Gofore - Go for or No go?

[atvate]

When a company has publicly branded itself specifically as an ethical operator, but quietly negotiates a deal with a state that couldn’t care less about ethical issues, I believe shareholders have the right to know about this without delay. If the company does not bring the information to light itself and/or abandon its value statements that have proven to be mere hollow talk, then bringing the matter to wider awareness through more informal channels operating in a legal gray area is, in my opinion, understandable. These ethical questions likely won’t affect the investment behavior of many people, but these matters are certainly important to individual investors.

It is, of course, clear that the matter would have inevitably come out at some point, so it is likely up to each individual’s own judgment whether such cooperation should be announced by the company as soon as discussions about potential cooperation even begin. In my opinion, open, timely, and above all proactive communication would be the least a company marketing itself as ethical could do in such a scenario. In this case, they could have released a statement, for instance, at the stage when the company’s own ethics committee took the proposal under review.

I don’t believe this will have any major negative impact on Gofore’s operations, unless the cooperation with the United Arab Emirates is canceled for some reason as a result, which I also don’t consider particularly likely. At least for now, the stock price hasn’t reacted to the news at all, but if the deal is finalized in the near future, I believe the share price will only head into the green afterwards.

[OsakePaisti]

“Gofore’s culture includes open internal discussion, which has now been grossly misused.”

→ Strange to shift the focus to this. It might be interesting to have internal discussions in the future. Brings Nokia’s “burning platform” to mind. Could the release have been issued without mentioning that we are calling the police…

[tj_hodl]

When you have nearly 2,000 employees, there’s always going to be someone complaining. And this doesn’t mean that even a significant portion of the staff is behind it. However, nothing justifies leaking internal company matters to the public. Most likely, confidential information has been disclosed and, at the very least, a non-disclosure agreement has been breached.

[StockTycoon]

What’s so special about that? An employee isn’t allowed to reveal information about ongoing business negotiations to the media based on some ESG perspective. Quite a few Finnish companies operate in the United Arab Emirates.

[Pohjolan_Eka]

In recent years, the media has been quite active in exposing companies that continue to do business in Russia, and so this news is part of a larger continuum of corporate social responsibility when doing business for the rulers of rogue states. The IT sector has many freedom- and privacy-oriented people who, for understandable reasons, may experience immense pangs of conscience when building a system that is likely to be used for the enslavement and oppression of people by a tyrannical regime.

Since internal channels have apparently already been exhausted and produced no results, the employee was left with no other options for influence before a potential future resignation than to contact the media. It shows very poor judgment on the part of management to start threatening their own top performers with criminal convictions in a worker-led organization and to engage in an active rat hunt. This, if anything, destroys the famous internal culture based on open discussion that enabled their success and kills future innovations and the motivation of the workforce. If you make a major misjudgment, the situation certainly won’t improve by shooting yourself in the foot afterwards.

[tj_hodl]

The Emirates is not a “rogue state”, even if it isn’t exactly a model student of equality. It simply cannot be the case that an individual or individuals can tyrannize and terrorize in such a commercially important matter without any consequences. Such “ethical constructs” are certainly doomed to fail, sooner or later. Gofore, too, will have to learn it the hard way.

EDIT: The Emirates also understands how to keep extremism in check, unlike certain European countries: Client Challenge

[Pohjolan_Eka]

This is one of the world’s cruelest nations, where citizens have no freedoms and, for example, the use of slaves is still completely normal. The North Korea of the Middle East, where citizens do not, however, starve or live in poverty thanks to massive natural resources.

Human rights in the United Arab Emirates

In today’s working life, you no longer need to kowtow to the small-town factory baron; it is quite normal for employees to blow the whistle when the employer acts like an ass. Most employers have an internal whistleblowing channel, but of course, it doesn’t work if the unethical behavior is practiced by the company management themselves. Naturally, employees have a duty of loyalty and will be fired if caught, but voluntary resignation is usually inevitable anyway unless the employer changes their behavior, so there is nothing strange about this in itself. I encourage all readers of this thread to contact the press and authorities if your own employer does something that society at large would likely consider unethical. This is how I act as well.

[Jaara1]

There are several angles one could take here. As we know, the growth of even this Helsinki growth star has been stuttering and profitability has taken a dip. The company has likely invested a fair amount of organizational time and resources into the ethical side, since they have an actual committee and a sustainability director. If these are just empty words, as it now seems, then from a shareholder’s perspective, the resources put into this could be directed toward growth. Or if these costs are simply cut, profitability will at least see a small boost.

As Eka noted, there may be personnel in the company for whom these sustainability issues are important. When management shows that actions and words don’t align, it may be reflected more broadly in staff motivation. And in this company, growth is ultimately driven by the employees.

[tj_hodl]

LOL. If you look at the Emirates in the context of the Middle East, it’s certainly not the North Korea of that group, not by a long shot. There are much worse places, but as I alluded to in my previous post, it’s no model student either. No one has probably said that you have to kowtow; you can always just quit and find a better place if the corporate culture doesn’t align with your values. What I find strange is that breaking the law is viewed with approval. The law is the same for everyone; if you break it, there are usually consequences.

[Pohjolan_Eka]

In this case, no one has demonstrably broken any law, and generally speaking, there is a rather high threshold for classifying information shared on a Slack channel as a trade secret. A breach of the duty of loyalty is not a criminal offense; rather, it is a civil matter.

[tj_hodl]

Yeah, it could be that it’s just a breach of contract (non-disclosure agreement). It’s worth reading Timur’s comments in the thread on LinkedIn. It’s quite interesting of HS to single out Gofore when they don’t even do business with the Emirates yet. There are plenty of Finnish companies that do.

EDIT: And I wouldn’t be at all sure that this isn’t also a violation of trade secrets, in which case it could be a criminal offense. The matter does have commercial dimensions, after all, and actual measurable damage can occur. Time will tell.

[ljkangas]

@Pohjolan_Eka

generally speaking, there is quite a high threshold for categorizing information shared (openly) with employees on a Slack channel as a trade secret.

Well… Information about which tenders are being participated in is normally considered to be at the very core of trade secrets. I also understand that this is the kind of information that a company, at least in Western markets, could not disclose itself without an assessment of whether it constitutes an anti-competitive practice under competition law. I would assess the trade secret perspective differently if this leak weren’t happening in the middle of an intense bidding phase.

The points raised by Nylund haven’t really been evaluated here—e.g., that it would be better for human rights if the project had an ethically oriented system provider. I can’t evaluate that either. But if asked which I find more unethical:

• continuing the preparation of the bid (the final decision only comes later) in a case where the ethics committee is so reserved,
• leaking the company’s trade secrets to the media to be picked apart,

it’s not difficult for my ethical compass: you damn well don’t leak things like this to the media no matter how annoyed you are that you didn’t get your way in the company’s decision-making. It’s petty-minded, likely intended only to take revenge and harm the company, just because you disagreed with some management decision.

Finally, a bit more about this ethical business.

@tj_hodl

Such “ethical contraptions” are doomed to fail, sooner or later. Gofore will have to learn that the hard way too.

I can’t take quite such a hardline stance, and I’ll say honestly that I don’t know what the best way to organize sustainability matters would be. Based on what we’ve seen, it’s indeed hard to believe this model is very successful. Internally, it just causes conflict, and from the outside, it looks like the sustainability director is being steamrolled in business decisions and the ethics committee is just overhead.

[OldFeki]

@Pohjolan_Eka

In this case, no one has demonstrably broken any law, and there is generally a rather high threshold for classifying information shared (openly) with employees on a Slack channel as a trade secret. A breach of the duty of loyalty, on the other hand, is not a criminal offense but a civil matter. It can lead to dismissal and, at worst, some kind of liability for damages, but even that is quite rare.

Discussion is always good, but every listed company in Finland decides what is permitted and what is not. Listed companies are not democracies, and their primary task is to generate shareholder value.

Writing that harms the employer is unequivocally a bad idea. Publicly disparaging an employer is always grounds for a warning or even summary dismissal, especially if the employee discloses business details. In my opinion, the line has been crossed in this case.

Gofore has an excellent reputation, and in a way, I understand the UAE reaction, but the employee’s actions in this case are unequivocally wrong. Leaking information from internal company discussions to Hesari breaks internal trust, and everyone will be on their guard from now on.

I still hope that Gofore does not remove the possibility for such open discussion on employer channels. It is very rare in Finland, where many companies would like to grow their business in, for example, the UAE, with which Finland has not prohibited business. There are restrictions on operating with the UAE that all companies understand. In this case, you don’t even need to look at them.

Less emotion, more business. As if this country and this industry could afford to be picky at the moment.

[Pohjolan_Eka]

@ljkangas

Well… Information regarding which tenders are being participated in has indeed normally been considered to be at the core of trade secrets. My understanding is also that, at least in Western markets, a company could not disclose such information itself without an assessment of whether it constitutes an anti-competitive restraint of competition. I would evaluate the trade secret perspective differently if this leak were not occurring in the middle of a fierce bidding phase.

As an outsider, it is of course difficult to assess, but one core requirement of a trade secret is that an effort has been made to keep the information secret. If the information has been published on an intranet or a comparable Slack channel and made available to a significant number of employees, then it may no longer necessarily be a trade secret, especially if it cannot be shown that this information has direct and significant economic value. Not all non-public information automatically constitutes a trade secret; it can also simply be internal information, the sharing of which may breach the duty of loyalty without being criminal. We will see later whether the threshold for prosecution is even met here.

@ljkangas

The points raised by Nylund have hardly been evaluated here – e.g., that it would also be better for human rights if the project had an ethically oriented system supplier.

This is a very common justification that doesn’t really hold up under closer scrutiny. It is hard to understand how, if Gofore, for example, were to deliver a population register to Gaza, it would be any more ethical than if it were delivered by some other operator. The ethical assessment must be done before the contract is signed and before committing to doing what the client wants, as withdrawing after the fact is difficult and sometimes practically impossible, as has been noted with Russian gas purchase agreements, for example.

@OldFeki

Discussion is always good, but every listed company in Finland decides what is allowed and what is not. Listed companies are not democracies, and their main task is to generate shareholder value.

Writing that harms the employer is unequivocally a bad idea. Publicly badmouthing an employer is always grounds for a warning or even termination of employment, especially if the employee discloses details about the business. In this case, I believe the line has been crossed.

Have you considered that due to the high level of employee ownership, the person leaking this information is likely also an owner of the company and is thinking of the shareholders’ interest by preventing a misstep?

The thinking that disclosing this same information by an authority or an outside journalist would have been acceptable, but by one’s own employee is reprehensible, is a bit strange. On the same moral-ethical grounds, all public disclosure of state grievances by journalists, for example, could also be condemned—and in many countries, the situation is indeed such that you could lose your life for it. Criticizing the actions of a public limited company isn’t really any different.

Revealing grievances from the inside naturally always involves risks for the whistleblower, which is why it requires significant moral backbone. It would be easier to keep one’s mouth shut, avoid all problems, and collect blood money into one’s own account. This is, of course, how most people usually act.

[OldFeki]

@Pohjolan_Eka

When done from the inside, exposing grievances of course always involves risks for the whistleblower,

I don’t understand your post. Gofore operates within the framework of business operations approved by Finland and cooperates with countries where it aims to provide added value to local citizens. Hundreds of other Finnish companies do exactly the same in the UAE, in practice also all the listed companies I know.

Significant trading partners of many Finnish listed companies operate in states whose governance can be justifiably considered at least questionable. Nevertheless, listed companies are not guardians of morality, but organizations engaged in business whose task is to operate within the framework of laws and regulations.

It is also unclear what you mean by “exposing grievances.” Do you mean that there are differing views within a listed company regarding the countries where the company conducts business and strives, completely legally, to increase shareholder value?

The leaker may have felt they were acting from moral motives, but in practice, the only thing the employer could be criticized for is exceptional transparency on these issues. In my own experience, all my employers have also done business with the United Arab Emirates, for example.

[Hermit]

“Values aren’t values if they don’t cost anything.”

There is nothing inherently exceptional or reprehensible about Gofore’s actions as they conduct business.
But it shows that ethical marketing talk is mostly just skilled marketers highlighting buzzwords and themes, rather than something that actually guides operations.

All companies do the same, mind you, but 95% of it is so disingenuous that it would almost be better to skip the moralizing altogether.

[Pohjolan_Eka]

@OldFeki

I don’t understand your post. Gofore operates within the framework of business activities approved by Finland and cooperates with countries where it seeks to provide added value to local citizens. Exactly the same is done in the UAE by hundreds of other Finnish companies, including practically all the listed companies I know.

The significant trading partners of many Finnish listed companies operate in states whose governance can reasonably be considered at least questionable. Nevertheless, listed companies are not moral guardians, but business organizations whose task is to operate within the framework of laws and regulations.

It is also unclear what you mean by ”exposing grievances.” Does it mean that within a listed company, there are different views about the countries where the company conducts business and seeks, quite legally, to increase shareholder value?

The leaker may have felt they were acting from a moral standpoint, but in practice, the only thing the employer could be criticized for is exceptional transparency regarding these issues. Based on my own experience, all my employers have also done business with, for example, the United Arab Emirates.

It’s quite nice for once to be on this side of the table, as my role is usually to criticize ESG stuff. Gofore’s own ethical handbook emphasizes human rights and every employee’s responsibility to take a strong stand on the implementation of ethical principles and adherence to Gofore’s fundamental values:

The ethical handbook also mentions anonymous whistleblowing as the last acceptable option when all other means have been exhausted. I don’t really see how the employees’ actions can be considered particularly reprehensible when Gofore itself explicitly demands ethical and moral behavior from its employees in all operations and strongly expresses that it wants employees who have the moral backbone to defend the company’s own values. Even when the CEO is the one violating them.

[atvate]

Gofore has positioned itself as a “pioneer of an ethical digital world,” so it is crystal clear that the company’s ethics will be scrutinized more closely than those of the average company. Talking about the legality of the company’s operations is irrelevant in this context, because the fact that something is legal does not mean that the same thing is also ethical. Correspondingly, when evaluating the ethics of operations, one does not directly evaluate their legality. For example, in the United Arab Emirates, dissidents are thrown into prison without concern, and there is practically no freedom of speech. Is this legal in the United Arab Emirates? Yes, it is. Is this ethical? No, it is not. I think this is an important point to remember, as the discussion easily tends to slip into evaluating the legality of Gofore’s operations, even though it has been about the ethics of Gofore’s operations all along.

By the way, Gofore ended the day 4% up. So much for that controversy

[Timur_Karki]

Thank you for the very good discussion regarding this recent United Arab Emirates & data leak controversy.

I would like to emphasize a few things here:

1. The Helsingin Sanomat (HS) article highlights ethical conflicts between the company’s management and the ethics committee. It is worth reading the other parts of the leaked text from CEO Nylund, not just the highlighted portion.

Nylund’s text states that the ethics committee and business management have collectively aligned on the need for more information. Furthermore, none of the responsible parties (the ethics committee, including Sustainability Director Kristiina Härkönen, and business management) were of the opinion that business could not be conducted in the United Arab Emirates.

It is completely legitimate to believe that all business and the consideration of business in the UAE is unethical. We have taken a different stance, and there has been no conflict of any kind within our company between management and the ethics committee on this matter.

2. Our approach to ethical review is likely very advanced, exceptionally thorough, and inclusive of our personnel. I do not see this value proposition being violated in this project either. The process is still ongoing; for instance, not a single document related to the matter has been submitted to the company’s board yet—not even the ethical assessment that has already reached the HS journalist. I suspect the final risk assessment will be such that board consideration is required.

3. The data leak is a very unfortunate matter and will likely cause some harm to the company. In any case, we must learn from this and be significantly more careful in the future, while still cherishing our own transparent and inclusive culture. Analyses of the matter are, of course, still ongoing, and the time for conclusions will come later. I never want to see internal deliberation concerning our clients on the pages of newspapers again.

4. It is a very positive thing that we are able to participate in tenders like the one seen here, and that we are considered an internationally credible player in this field—without taking a stand on this specific case.

5. Finally, a minor gripe about this unfair treatment. Two months ago, the President of the Republic made an export promotion trip to the UAE, accompanied by numerous Finnish companies. All sorts of companies are already operating there. Why is that not considered reprehensible and noteworthy, but our tender consideration process suddenly is? The journalist found 20 critical individuals on our internal channel (we have almost 1,900 employees). Of course, the matter certainly divides the staff more than that. We will certainly take all concerns and analyses into account in our handling of this matter—if we can even continue the process at all after this controversy.

[Aksu1]

I can imagine it is frustrating to follow a discussion based solely on information that someone with a very critical perspective on the matter has chosen to leak to the media. In my view, it was exactly the right reaction from the company to make it clear that such incidents must not be repeated. If possible, we on the investor side would like to hear later whether this results in any changes to prevent similar cases in the future.

And let’s hope that we will eventually hear more about this potential project through the proper official channels.