Circle of escalation

A phenomenon that may happen in an organisation of a certain size and is guaranteed to in a big one, the circle of escalation resembles a 4x100 medley relay, only one where contestants carry a stalk of limp celery rather than a stiff baton.

It plays out as follows:

A salesperson approaches you with what is, on its face, a narrow and uncontroversial question — one to which, in your direct recollection, the salesperson already knows the answer. This is a sure sign she is indulging in a kind of compliance arbitrage — probably of the odious kind where, while she does present the whole picture to the internal control functions after a fashion — she does so in several instalments, each so thinly sliced as to present the controller in question only with those facts the salesperson considers germane to the specific risk decision (and helpful to her cause).

As a seasoned compliance professional, you adopt the standard approach: ostensible approval, hedged around with caveats deep enough for you to jump into and hide in later on, should shots ring out in the aftermath.

“I would be inclined to be okay with this, subject to you confirming the withholding position with Tax,” you say, happy that you have passed the tangled skein off your desk.

Of course, the tangled skein has not magically winked out of existence: it has simply ascended from your desk, hovered momentarily and landed with a thud on some one else’s. This poor blighter, a tax lawyer, will have just the same aspiration as you: to pass the sausage on as efficiently as possible. To fulfill it, he will take exactly the same approach you did:

“There may be an increased risk of retrospective withholding which is hard to quantify,” she will say (when one gives tax advice for a living one gets adept at saying this sort of thing by rote) “but as long as the desk is prepared to absorb that additional risk then I have no objections to this.”

And lo, off the escalation goes to the business. Salespeople, naturally, have but one goal — impregnating their clients — but not in a way that involves assuming any personal responsibility for a transaction which goes wrong. Up the chain it goes, to trading management. Trading management won’t have any idea what absorbing additional tax risk even is, and so will pass it onto the chief operating officer.

And so on.

Eventually it will get to the level of exaltation in the firm wherein personnel known by all — not to their faces — by only familiar versions of their Christian names. Chuck will say, “In principle I would be inclined to be ok with this at this stage, but can you just run this by Chip to make sure they have no issues.”

Chip is the general counsel, a handsome silvered fifty five year-old with the bearing, and legal acumen, of a 747 pilot. You know exactly where he’s going to send it, don't you.

And so the cycle of life turns fully and returns whence it came.

See also

• Celery, and limp celery
• I would be inclined to agree
• I am supportive in principle at this stage
• I have no objections
• The circle of escalation
• I could get comfortable