The scam of the UN Kofi Annan Gold Award
There’s an odd, albeit somewhat hilarious story, making the rounds on social media and in Ghanaian press about an award scam dubbed the ‘UN Kofi Annan Gold Award’.
According to the stories, popular Ghanaian celebrities, and high profile personalities, including Sarkodie, the Vice-Chancellor of the University of Ghana, Professor Ebenezer Oduro and Berla Mundi have been deceived by an alleged fraudster, Dr. Kwame Owosu Fordjour aka Wyclef.
Fordjour offers these celebrities awards under the auspices of the United Nations (UN) and the Kofi Annan Foundation.
The prospect of receiving such honors makes the unsuspecting prospective awardees jump at the opportunity to accept and in most cases, sponsor the award. It is alleged that Fordjour runs the scheme due to its effectiveness in receiving sponsorship deals and financial commitments from the celebrities and brands to host these events.
This isn’t Fordjour’s first dupery rodeo; according to the Ghanaian Times. He had, in 2010, instituted an award scheme for rural banks in the name of the UN, and requested participating banks to pay Ghc 200 (USD 35). He was imprisoned and only recently released.
To the average person, this story seems ludicrous, perhaps laughable. However, scams like this are popular across Africa.
A few weeks ago, my Nigerian-based father mentioned he was being honored by a youth group. After he mentioned he would be unable to attend, they told him that all they wanted was his significant donation, not his attendance.
The rise of Development Awards
This recent experience reminded me of a friend’s stint at a media company that specialized in giving awards. After the National Youth Service Corps (NYSC), a programme in Nigeria to involve graduates in nation-building and development, Damola got a job as a reporter and was responsible for scouring the dailies, identifying people (preferably public officials and civil servants), and sending them letters that congratulated them on their contributions to national development and offered them awards.
The award itself attracted no charge; however, recipients had to pay between N150,000 to N500,000 for their profiles to be included in the event brochure plus plaques. According to him, the company’s leadership became wealthy because of this.
Why awards matter
Awards, ratings, and recognitions were purposed to be an acknowledgment of a person or a group of person(s) for setting the bar in a certain field, or for meeting certain milestones. Many awards serve as optimum benchmarking, indicating that the recipient’s work and/or its professionals are standard-setting. They build the credibility and strength of the recipients, validating their position with prospective clients. Awards also demonstrate the value a company brings to its client especially in a metric-conscious world. These awards are usually given by regulators or industry associations, and companies to their clients, or relevant news organizations. An often unexpressed motive for award organizers is the need to establish own status and gain a reputation. To give an award, you have to be in a position to confer prestige, which indirectly confers some form of status.
Image laundering and red herrings
However, awards may also be red herrings focused on establishing legacies for the organizers. And we have many of this: the popular Nobel Prizes were meant to burnish Alfred Nobel’s dynamite history; the famous Sackler family who benefited from the opioid crisis in the US through OxyContin have sponsored numerous awards and supported research and education charities through their Sackler Trust, and the increasing number of technology hegemons known more for their philanthropy instead of predatory and antitrust practices.
In these examples, awards have been used as sleight of hand to divert from real intentions, whatever those may be.
Causatives of the 2008 financial crisis
Much has been said about the 2008 financial crisis, the collapse of the world’s financial system, and ensuing credit crunch with appropriate blame apportioned to the financiers (mortgage lenders), who doled out subprime loans to borrowers with poor credit histories; financial engineers at the big banks who turned them into supposedly low-risk securities by putting large numbers of them together and the Central bankers and other regulators for turning a blind eye.
The pooled mortgages were used to back securities known as collateralized debt obligations (CDOs), which were sliced into tranches by a degree of exposure to default.
Credit rating agencies such as Moody’s and Standard & Poor’s were responsible for allowing the housing crisis to become a nationwide economic disaster. They have faced increased criticism for the failure of credit ratings to accurately reflect the riskiness of complex structured products in the lead-up to the financial crisis.
Investors bought the CDOs because they trusted the triple-A credit ratings assigned by Moody’s and S & P without knowing that these ratings were paid for by the banks that created the CDOs, under an issuer-pay model that persists today. As the financial crisis unfolded and the assumptions underpinning rating methodologies for such instruments were shown to be overly optimistic, these agencies hastily downgraded their ratings, which contributed to a pricing collapse that left the market for structured products virtually non-existent.
Postmortem analysis attributed the rating failures to a lack of internal controls, conflicts-of-interest inherent in the issuer-pay business model, a lack of transparency, and a perceived absence of accountability for credit rating agencies.
In a UN discussion paper on Credit Rating Agencies and their Potential Impact on Developing Countries published in January 2008, the author wrote, “Fitch and the Egan-Jones Rating Companies have accused the big two CRAs of practicing the “notching”, a practice whereby Moody’s and Standard and Poor’s would initiate an automatic downward of structured securities if the two agencies were not hired to rate them (EganJones Ratings Company, 2002)… Unsolicited ratings raise potential conflicts of interest. Both Moody’s and Standard and Poor’s state that they reserve the right to rate and make public ratings for United States SEC-registered corporate bonds, whether or not requested by an issuer.
If the issuer does not request the rating, the rating will simply be based on publicly available information. If the issuer requests the rating, then it provides information to the rating agency and pays the fees. Many new entrants in the credit rating industry issue unsolicited ratings to gain credibility in the market.”
Theranos, Insys, and Wirecard: the award runway to humiliation
Some of the most recognized companies of the last decade have been embroiled in alleged criminal practices shortly after they carted several awards and recognitions. Insys, an opioid manufacturer based in Arizona, USA was fined a $225m settlement after its founder and top executives were convicted for bribing doctors to prescribe a highly addictive painkiller. Before this time, the company received awards for its “rapidly escalating growth curve.”
Theranos, a Silicon Valley blood-testing company became a venture-capital darling and was applauded for its “commitment to patients” and “innovation in diagnostics development and health care delivery” by several award organizations. As Theranos raked in millions of funding (over $700m), its CEO, Elizabeth Holmes became the subject of media attention and acclaim in the tech world, graced the covers of Fortune and Forbes, and spoke on panels with former US President, Bill Clinton and Executive Chairman of Alibaba Group, Jack Ma.
The Theranos bubble burst after investigations into the company revealed “major inaccuracies” in the testing Theranos was doing on patients and discovered the company had no proprietary technology as stated.
Its executives were charged with “massive fraud” by the US Securities and Exchange Commission (SEC). Before the collapse of Theranos, Holmes received widespread acclaim. She was named one of TIME magazine’s Most Influential People in the World; Forbes Under 30 Doers Award and ranked on its 2015 list of the Most Powerful Women; Woman of the Year by Glamour and Fortune’s Businessperson of the Year and listed on its 40 Under 40.
She also received an Honorary Doctor of Humane Letters degree from Pepperdine University and was awarded the 2015 Horatio Alger Award, making her the youngest recipient in its history.
Before its challenges, Wirecard was a German payments processor that handled credit and debit card payments. A stock market darling that promised to make cash obsolete, the company grew over two decades to become a member of the Dax index with a market value of €28bn. In the eyes of retail investors, the fintech giant was the country’s answer to Silicon Valley.
However, Wirecard earned the reputation of being one of Germany’s 30 largest companies through years of deceit and misleading the public.
The company had notoriously inflated its client base, total volume, and sales. Wirecard dominated media headlines worldwide after it was embroiled in allegations of fraud as regulators couldn’t confirm the existence of two Philippine bank accounts with €1.9 billion in cash.
Wirecard had carted away several national and international awards for Best Employer, Top of the Wallet, Change Agent of the year, Financial Services Institution of the Year, and The Company to Watch among several others.
Seduced by the narrative
The rise and fall of these companies is a case study in the carnage possible when a firm’s accounting goes awry but investors, regulators, and external stakeholders are so seduced by the company’s narrative that they cannot, or refuse to see it.
Most awarders are blinded by the pervasive image of a growing company that is led by visionary leaders and is financially sustainable. But this throws up inequalities in the visibility of the same industry players who may not or cannot afford the same level or marketing.
Also, many awards are devoid of diversity and seem to be stuck in a time-bubble, unaware of all the progress the world has made.
They celebrate the same person or group of persons in a certain field due to the popularity of said person or group of persons have garnered, overlooking a smaller person or group of persons in the same field. Many pundits believe that awards have increasingly derided minority groups in various spaces e.g Oscars so white.
These awards are flawed because of three major reasons; they are unfair to companies and people that are not keen on, or cannot afford visibility; they glamourize incompetence, sacrificing merit on the altar of money and they can be used by unscrupulous people to make money or acquire influence, as reiterated above.
Awards in themselves are not bad; if done well. Awards are tools for recognition of excellence in defined areas. Awards that align with created models validate expertise or reward milestones. For instance, an award from an African securities exchange can recognize industry players whose participation in the fixed income, foreign exchange, and derivatives markets have supported and fostered growth in these markets and invariably, the African economy.
This securities exchange has the legitimacy to give such awards because it is a quasi-regulator.
A different example is TripAdvisor. Although it is not a regulator, it can confer awards because it provides an enabling ecosystem for businesses such as hotels and restaurants across the world.
But what indices can explain how Uncle Joe, a teacher in Ilorin, a city in Northern Nigeria, or Owusu, a known con artiste in Ashanti, Ghana are giving business leadership awards to people?
If done poorly, awards can be biased, divisive, and often reward and validate bad behavior/poor values and contribute to the steady decline of societal values. We have cases whereby awards are simply made up just to make people feel good about themselves. These awards can demotivate people who have worked equally as hard (or even harder) to achieve similar goals to those which are being awarded.
Bottom Line: Trust but verify
Most employers have a process of verifying the certificates and professional references of prospective employees. I advise individuals and companies to review award invitations with a few questions. These questions have helped me sieve through dozens of award requests I receive weekly to tactically assign budgets only to initiatives that aid the brand.
Prospective awardees can do a simple Google check with a focus on these questions:
- Who is the awarding institution?
- Is the awarding institution credible enough to confer the award?
- What is the true motive of the awarding institution for conferring awards?
- Are the nominees a true reflection of the industry/sector of the award?
- Is receiving the award conditional on payment?
- Previous recipients of the award: are they inspirational companies you would want to model to?
If the company or its leaders are recognizable, then you can go ahead with your internal process for review. It is possible that after assessing an award on the parameters above, you may want to go ahead, possibly because you want an award to benchmark with other peers.
Awards are not bad per se, but we need specific yardsticks by which we define the criteria for offering awards. If this is not taken into consideration, the awards system might prove counterproductive in the long run.
So, while I am hopeful that the future of awards will take a slightly different turn, tending towards more methodological conclusions as suggested above, I believe we might just need a break from it all.
Let us tear the system down altogether, and rebuild a better, more sustainable one.
About the writer:
Temitope Osunrinde is a senior marketing executive who works with organizations, businesses, people, and ideas focused on transforming Africa.
He is based in Lagos, Nigeria, and contributes analytical articles to various marketing and business platforms. He also writes a blog TemiOsunrinde.com where he shares his front-row experiences in marketing, technology and business as well as useful hacks for living intentionally.
He’s on Twitter as @hellotemi but prefers email via [email protected]
[NB: This article was previously published on Business Insider]