Bankers Dishonest By Training, Not By Nature, Swiss Study Finds by NICK GRIMM | ABC.NET | NOVEMBER 28, 2014 A Swiss study has set out to establish once and for all whether bankers are scheming, untrustworthy scoundrels. The study of more than 200 international bankers put their honesty to the test and found them to be fundamentally decent human beings, until they were reminded about what they did for a living. At that point, the research team discovered they began cheating on their tests. Interestingly, that result was not replicated when sample groups from other professions were asked to complete similar tests. Behavioural economists Alain Cohn, Ernst Fehr and Michel André Maréchal laid out their findings in a report entitled Business Culture and Dishonesty in the Banking Industry. In the wake of a series of finance industry scandals, the team set out to test the bankers' honesty with a simple coin-tossing test. "They were asked to flip a coin 10 times and to self-report the outcomes of the coin flip," Mr Cohn explained to The World Today. "Their behaviour in the coin tossing task is a measure of their dishonest behaviour." In order to test that behaviour, the researchers also gave the bankers a financial incentive to lie about their results. "They could cheat to increase their earnings," Mr Cohn said. "For example, in the first coin flip they knew that heads would give them $US20 and so, because they knew that heads would give them a good outcome, they could easily cheat and hide behind chance." But the researchers knew that, given half a chance, the promise of easy money could result in many non-bankers cheating on their results as well. So, to refine their methodology, they first split their cohort of bankers into two groups. Mr Cohn said the first control group was tested after being asked a series of questions unrelated to their occupation, for example "questions about tea consumption or favourite leisure activities". The second experimental group was asked a series of questions about their careers. "In the experimental group we manipulated the saliency of participants' occupation and role as a bank employee by asking a few questions about their professional background," he said. "So for example, we asked them what banks they worked for or how many years of professional experience they have." Bankers started cheating when reminded of their job When the two groups were then asked to perform the coin-flipping task, the results were revealing. The bankers who had been primed to think about their jobs were more likely to cheat than those whose minds were still occupied with thoughts about their homes and families. The results suggest bankers are not inherently dishonest. "They were very honest in the control condition," Mr Cohn said. "[It was] only when we rendered their professional role more salient [that] they began to cheat." It was a technique used by researchers previously with another segment of society suffering reputational problems, according to co-author Mr Maréchal. "Everything actually started with an opportunity to conduct an experiment on cheating with inmates at a maximum security prison," he said. "The inmates cheated more when they were reminded of the fact that they were criminals. So we used a similar approach in this study to examine the business culture in the banking industry." 'Unwritten rules' of industry promote dishonesty When the researchers sampled a range of non-bankers - those employed in manufacturing, telecommunications and the pharmaceutical industries - they found no variation between control and experimental groups. "We ran the same experiment with professionals from other occupations or in other industries," Mr Cohn pointed out. "We didn't find any difference between the control and the experimental group, so this implies that there is something specific in the banking industry that promotes dishonest behaviour. "It's about unwritten rules of behaviour in the financial services industry that encourage or maybe tolerate dishonest behaviours." The research makes for uncomfortable reading for bankers, but the study received support from those inside the finance industry, conscious that recent scandals reflect a serious problem with banking culture. One international bank allowed 128 of its staff to take part in the research on condition of anonymity. Another 80 participants were drawn from a range of other banks. So if there is a genuine will to change the culture of banking, what can be done to encourage more scrupulous behaviour? The researchers said the payment of bonuses for those generating high profits first needed to be closely scrutinised. "It shouldn't be that financial incentives reward employees for dishonest behaviour," Mr Cohn said. He also questioned the efficacy of forcing bank staff to sit through honesty training courses. "If the ethics training remains in the abstract, it will not help much. Just pledging integrity is not enough. We think you have to exactly name and be very concrete about the behaviour deemed desirable." IRS Paying Millions In Bonuses To Employees Who Are Tax Scofflaws by STEPHEN DINAN | WASHINGTON TIMES | NOVEMBER 27, 2014 John Koskinen says workers not penalized for ‘unintentional’ mistakes IRS employees who made “unintentional” mistakes on their taxes are still eligible to get bonuses this fiscal year, the agency confirmed this week. Commissioner John Koskinen announced the bonuses in an email to employees on Monday, saying they were a way to reward long-suffering staffers who have put up with budget and workforce cuts and are still keeping the agency humming. But the payout, worth millions of dollars in taxpayers’ money, isn’t sitting well with congressional critics, who said it sends the wrong message at a time when the agency is reeling from several scandals, and when even staffers who are delinquent on their taxes can collect bonuses. “It’s no wonder the American people find it hard to believe the IRS needs more money when the agency fails to collect back taxes from their own employees and instead rewards them with bonuses,” said Sen. Orrin G. Hatch, the Utah Republican who is poised to become chairman of the Senate Committee on Finance next year. “American families have been doing more with less for far too long now, and it is time the IRS [does] the same.” IRS bonuses have been contentious ever since the May 2013 revelation that the agency improperly targeted conservative groups’ nonprofit status applications, including long delays and intrusive questions. Some groups are still awaiting approval nearly five years after they applied for nonprofit status. But Mr. Koskinen said in an email to employees that the bonuses were an appropriate way for taxpayers to reward the agency that polices them. “I believe that rewarding our high-performing employees is a vital investment for our nation’s tax system,” he said. Mr. Koskinen, who took over at the agency’s helm to clean up after the tea party scandal erupted, said the agency has shed 13,000 staff positions since 2010 but has more duties than ever. One of those is administering Obamacare’s tax penalty, which will show up in many tax filings early next year. “Performance awards are a good investment that pays off — and they reflect the hard work you and your colleagues do for the nation,” he said. The bonuses, which were first reported this week by The Hill, a newspaper that covers Congress, amount to about 1 percent of their salary for most employees. Several years ago employees got bonuses of 1.75 percent, but Mr. Koskinen said belt-tightening has hit hard. Mr. Koskinen said he would take additional steps by denying bonuses for employees deemed to have violated the federal law’s code of conduct for the IRS. That means workers who abuse taxpayers, falsify documents, engage in extortion, refuse to file their tax forms or are caught intentionally understating their taxes won’t get bonuses. The law calls for them to be fired. However, hundreds of employees who are behind in their taxes but aren’t deemed to have intentionally defrauded the government could still get bonuses, the agency confirmed to The Washington Times. “IRS leadership determined that in cases of willful tax non-compliance, performance awards will not be paid to otherwise eligible employees. However, the law specifically excludes unintentional tax errors made due to a ‘reasonable cause,’ not to penalize employees for legitimate, unintended errors,” the agency said in a statement. “The IRS monitors 100 percent of IRS employee tax accounts to identify acts of potential non- compliance and works with employees to ensure prompt payment.” The agency said more than 99 percent of its employees file and pay their taxes on time. “It’s important to remember that not everyone at the IRS is a tax expert — some work in non-tax- specific areas in occupations ranging from IT programmers, administrative professionals to human capital specialists. Where employees have been found to have made unintentional tax mistakes, they would still be eligible to receive performance awards they have earned,” the agency said. The IRS’s inspector general reported in April that the agency paid out more than $1 million in bonuses earlier this decade to 1,146 employees who investigators said had “tax compliance problems.” Those employees were also awarded more than 10,000 hours of paid vacation, valued at $256,000. Inspector General J. Russell George said the bonus payments are legal, but pointedly noted that the law calls for IRS employees found guilty of serious misconduct to be fired. In his email to employees, Mr. Koskinen apologized for the bonuses’ timing, saying he’d wished they would have gone out by the end of this year. But he said bonuses they paid in April “complicated the situation.” He said the agreement reached with the National Treasury Employees Union, which represents many IRS workers, calls for the next round of bonuses to be paid at the end of 2015. NTEU didn’t respond to a request for comment Wednesday on the bonuses. IRS paying millions in bonuses to employees who are tax scofflaws VIDEO BELOW http://www.washingtontimes.com/news/2014/nov/26/irs-awards-millions-in-bonuses-to-tax- delinquent-e/ INFOWARS.COM BECAUSE THERE'S A WAR ON FOR YOUR MIND