ETHICS IN THE PROPERTY VALUERS PROFESSION
WHAT IS ETHICS?
Mark Twain said: "I'd rather teach morals than practice them any day. Give them to others. That's my motto".
When one asks people what they believe "ethics" is, the answers could include:
• "Ethics has to do with what my feelings tell me is right or wrong."
• "Ethics has to do with my religious beliefs."
• "Being ethical is doing what the law requires."
• "Ethics consists of the standards of behaviour our society accepts."
• "I don't know what the word means."
On the surface, many of these answers appear to be quite acceptable. After all, what is wrong with doing things according to religious beliefs or doing what is right or what the law requires? Surely, if all people acted this way, we would all be ethical human beings? Not true!
If ethics had to do with our feelings telling us what is wrong or right, we would have different ethical standards every day according to our moods and convictions.
If it had to do with our religious beliefs, we would all have different standards based on our own beliefs. Atheists would be the worse people to do business with as they would have no ethical standards. Some would have no problem with abortion being ethical; for others it won’t be acceptable.
Doing what the law requires should be a good guideline for ethical behaviour, but it isn’t. Think of slavery and apartheid laws. Most people, including our police and army, thought they acted ethically under apartheid laws.
Doing what is acceptable to society could pose many problems. Some societies accept abortion while others believe it to be murder. Some businesses will have no problem to include donkey meat in your hamburger patties, while others would think it to be unacceptable.
I was recently confronted with a situation where I was asked to “make a contribution” in exchange for a contract. When I objected diplomatically, I was told that “this is the way we do business in Africa”. In other words, it is acceptable by society. If we always did what society accepts, we could find ourselves in some deep, murky, waters!
So, if ethics is not any of the above, what is it?
Most people confuse ethics with moral behaviour. In a perfect world, from a strict Biblical Genesis perspective, moral behaviour and ethics should be the same. However, if you believe in the Bible, one could argue that, following the fall of man in the Garden of Eden, the inherent sinful nature of human beings created the need for ethical standards.
Whether we believe in the Bible or not, we just have to read the newspapers or watch the local and international news to realise that there is something seriously wrong with mankind in the way we treat each other.
In society today, ethics and moral behaviour should not be used interchangeably, primarily due to the varying degree of human morality which would result in a confusing concoction of ethical standards. Some believe in polygamy while others believe it to be immoral and unethical when measured against their own religious beliefs. While I may believe polygamy could have its benefits, ethics cannot be what I think. There must be some other guidelines as to how we can all act in a way which would be reasonably acceptable to each other.
Thus, while there may be elements of morality within ethics, good moral behaviour does not always equate to good ethics.
Definition of ethics
These are some definitions that attempt to explain ethics and the behaviour of people.
• "a set of concepts and principles that guide us in determining what behaviour helps or harms sentient creatures".
• "The rules and standards governing the conduct of a person or the members of a profession".
Ethics can therefore be summarised or described as a set of rules or standards of behaviour which promote human welfare and “the good”.
Business ethics, on the other hand, would be a similar set of rules or standards of behaviour which would promote “the good” in the business environment or in the organisation.
Ethics therefore imply generally acceptable human behaviour and relationships. “The good” in this instance refers to that which is generally acceptable for the general good of human beings or, in the case of business ethics, the organisation.
The Property Valuers Profession
With the above as background, let us consider the Property Valuers Profession and the members that make up the profession. We have an Act and a Code of Conduct that regulate (or is supposed to regulate) the way in which we conduct business.
The question we are dealing with in our discussion today is:
Do we consider this to be an ethical profession, which would include reference to its individual members?
[At this stage a quick poll was undertaken by means of a secret ballot to gauge the perception of the audience as to whether we have an ethical profession. Out of 55 votes cast, the answer was as follows:
Yes, we have an ethical profession: 36 votes
No, we don’t have an ethical profession 19 votes
The same poll will be undertaken after the discussion]
We don’t have adequate time today to fully unpack and analyse this question, but we are going to look at some case studies which could enable us to answer the question at least on a general level in order to determine whether we should have further discussions on this topic.
My personal view is that the profession is faced with some serious challenges with regard to the ethical behaviour of its members and it would appear that we lack guidance with regard to how we, as individuals and the greater profession, should act in an appropriate ethical manner. Our discussions today will seek to highlight these challenges and question need for further guidance.
We shall not seek to address reasons for the apparent lack of ethical behaviour, as these could be numerous. An example is that we could argue that “times and business are tougher than ever” or that “everyone is doing it” or that “if I don’t do it, I won’t survive”. We can also blame the recent and ongoing financial crisis on the fact that we are forced to act in certain unscrupulous ways.
These responses are unacceptable as the study of ethics is also designed to evolve with time and events, hence we should constantly review the position of the organisation, the profession, the professional and the public which we serve in order to address the greater good.
It may be unethical to include donkey meat in our burgers today, but it may be ethical 10 years from now.
We are simply not evolving in our ethical behaviour as a profession and find ourselves stuck somewhere between the past and the present without much of a future in terms of ethical behaviour.
Code of Conduct
“The purpose of this code is to provide a code of professional conduct for registered persons”. In other words, it is a set of rules or guidelines to guide members of the profession on how they should conduct themselves when doing business.
In addition to the Code of Conduct, there are the Council Rules, which have been promulgated in terms of Section 37 of the Act. If a member is charged and found guilty of any misconduct, which may include contravening the Act or the rules or the code of conduct, such member may be may be penalised by the Council for the Property Valuers Profession, which can include de-registration of the member.
Delegates are encouraged to obtain and study copies of the Act, the rules and the code of conduct. In the interest of time and the topic of this discussion, the following standards are highlighted from the code of conduct and the rules:
A registered person shall not –
• use false, misleading or exaggerated claims in order to secure assignments;
An example would be the submission of false information regarding the experience of the professional.
• supplant or attempt to supplant another registered person in a particular assignment after definite steps have to his or her knowledge been taken towards the engagement of such other registered person, except with the written consent of the latter;
A typical example would be where the professional deliberately promotes him/herself as being able to provide the service better and/or cheaper than another professional who has already been assigned.
• either personally or through the agency of any other person, canvass or solicit an assignment by offering by way of commission or otherwise, to make payment for obtaining such assignment;
The classic example here is the payment of kickbacks to senior people within financial institutions and/or government or other organisations in order to retain or obtain work. This could include the giving of exorbitant gifts, which is considered to be bribery.
In carrying on the property valuers profession, a registered person shall -
• order his or her conduct so as to uphold the dignity, standing and reputation of the property valuers profession by maintaining a high standard of professionalism, honesty and integrity;
The quality of our reports, the way we dress and speak to our clients, say a lot about our values and that of the profession. It is a sad reality that individual poor standards and values can be perceived by the public to be that of the entire profession.
A case in point is the many debates about different values for the same property by different valuers in the instance of land reform valuations. This is causing serious damage to the profession, not just the individual.
• act with the strictest independence, objectivity and impartiality in performing a property valuation;
Some professionals are often guilty of valuing according to the client’s required outcome rather than remaining objective. In other instances professionals are worried that they might lose a contract with a large client if they don’t “meet value”.
• sign all property valuation reports and other documentation relating to his or her work in the property valuers profession, prepared by or for him or her, and use his or her title as provided for in section 22(3) of the Act.
A number of instances are known where valuations are performed by one person (usually a candidate valuer) who then copies the signature of his/her mentor (with or without permission) and applies it to a report in order to create an impression that the report was completed by someone else. This is not only unethical but also constitutes fraud.
In other instances, no credit is given where work of previous others were used.
In carrying on the property valuers profession, a registered person shall not -
• mislead any person, or allow any person to be misled, in respect of the registered person’s professional qualifications and status, either by providing incorrect information or by withholding relevant information;
An example would be for the professional to withhold the fact that he/she is restricted in terms of the Act to perform a certain valuation.
• without first qualifying himself or herself, undertake an assignment for the execution of which his or her training and experience have not rendered him or her competent.
And my own addition –
• Shall not use the information of another professional from a previous valuation report as part of a new assignment, without prior written approval from the author of the previous valuation.
From the Rules:
(1) A candidate valuer or a candidate single residential property assessor –
• may not canvass or solicit property valuation work or advertise his or her professional services; and
• shall accept an instruction to perform property valuation work only from a professional (“the instructing professional”), which instruction shall –
- be in writing;
- state the name, postal address and registration number of the
- instructing professional;
- contain the name of the client requiring the property valuation; the registered or other description of the property to be valued; the type of property; and the purpose of the valuation; and
- form part of any resulting valuation report prepared by the candidate valuer or candidate single residential property assessor.
This rule is currently not followed by some candidate valuers and their mentors. It simply means that all work must be solicited by the professional person who may then instruct the candidate. Strictly speaking, the candidate must refer the prospective client to the professional, who will then negotiate the assignment with the client, and then instruct the candidate to perform the valuation in the appropriate manner.
How ethical are we?
A person owns a property within a specific municipality. The property is bonded with one of our Banks. The Bank requests that a valuation of the property be done to release a portion of the security. The company who is requested to perform the valuation for the Bank, is the same company who performed the municipal valuation of the property. They send the same valuer who performed the municipal valuation. The valuer then uses the confidential lease information to update the municipal value to the same value as that for the Bank. The owner may be prejudiced as the lease information would not generally be available to the municipal valuer to allow for such a detailed calculation.
While it may or may not be improper for the valuer to conduct the valuation, he/she (or the company) is required to disclose his/her prior interest in the valuation of the property in terms of the Code of Conduct to the Bank to allow it to consider if there could be a conflict of interest and then give its approval for the valuer to proceed.
A municipality advertises a tender for its municipal valuation roll. One of the requirements is that the municipal valuer shall be a Professional Valuer. You are a Professional Associate Valuer with restrictions. Is it (1) ethical to submit a tender, and (2) to accept the appointment if you are successful?
The tender requirements are set by the municipality and they may, within the confines of the relevant legislation and their procurement policy, appoint whoever they wish. A person who does not meet the requirements of the tender is free to apply provided that person fully discloses such shortcomings. If, for whatever reason, the municipality chooses to appoint the person after full disclosure, it could still be unethical to accept the appointment if the person knows that he/she would not be able to meet all the requirements of the tender. However, if the person will be making use of other professionals with the required skills and this was fully disclosed, it may be considered ethical to accept the appointment. Full disclosure is the key factor in this case.
An unregistered person is required to act in the position of municipal valuer at a municipality. Is it ethical to accept the position?
In terms of the Act, Code of Conduct and Rules, this would be unethical, even if it was disclosed. If the person was registered as a Candidate Valuer, he/she would be able to accept the position under mentorship. Such mentor must reside in the municipality.
You are asked to quote for the valuation of a large regional shopping centre. You know that your likely competitors are expected to quote between 70% and 80% of the promulgated tariffs. Business is tough and you know that you will definitely get the work of you quote 20% of the tariff. Is it ethical to do so?
Competition is important in any business environment as long as it remains fair and healthy competition. By deliberately quoting so low as to ensure that no one else is considered for the assignment, and knowing that you would have to provide a very basic service, bordering unprofessional, to justify such a low quote, you may be in contravention of the Code of Conduct in so far as professionalism, honesty and integrity are concerned. It may also be seen as a deliberate attempt to supplant your competition, hence it could be viewed as unethical.
Your one-man business is doing very well and you are inundated with new assignments. You would like to appoint an associate valuer to help you, but it is a specific requirement by your client that only you may perform the valuations. You decide that you will use the help of an associate valuer, who will perform the valuations for your signature.
Not only is this unethical but also fraud as it is against the client’s specific instructions and it is designed to mislead the client.
You’ve enjoyed a great year in your business. As a token of appreciation for the work received from one of your large corporate clients, you decide to send the senior manager and his wife on a trip to Mauritius. It will cost you R 30,000 but you argue that you received at least R 3,000,000 worth of business from him during the year.
Not only is this unethical, but it may also be considered to be bribery and corruption. A gift of appreciation is supposed to be just that: a token of thanks!
What can we do to improve our ethical standards?
• Role of the Council
The SA Council for the Property Valuers Profession needs to do more to keep its Code of Conduct and Rules relevant. It must also address the need to sensitise members and the public with regard to the ethical standards of the profession.
A committee should be appointed by the Council to deal specifically with the issue of ethics in order to ensure that the Code of Conduct remains relevant at all times.
• Report any misconduct
Each one of use as members of the SACPVP has a duty to report any instances of misconduct in order to rid the profession of the rotten apples that may tarnish its image. Complacency will lead to further deterioration of standards.
• Study ethics to remain relevant and aware
It is important for each professional to, at least, remain fully aware of the ethical standards set by the SACPVP and to continuously interrogate such standards to ensure that they are relevant to modern day ethical standards. If not, recommendations must be made to the SACPVP to amend the Code of Conduct and/or Rules.
• Think ethically
- Analyse whether your proposed behaviour will promote the greatest good or the greatest human welfare. In business this implies that we interrogate whether our clients, staff and society will benefit by our behaviour.
- Identify the legitimate human rights of individuals and your duty towards them. This implies that we remain aware of the rights of people and that we respect them accordingly, whether we agree or disagree with them.
- Analyse whether all parties are treated fairly, which could be equally or differently. Fair does not always mean equal. A person performing surgeries in a hospital is expected to earn more than one who cleans the floors. But they can both be treated in a fair and transparent manner according to basic human rights and needs as well as company policies.
- Analyse whether the proposed behaviour is consistent with recognised virtues. These virtues include honesty, integrity and respect. Our actions, whether at home or in business, should always strive to reflect these virtues.
- Ask whether the common good is adequately served. Common good means the good to society in general. If our behaviour will achieve that, it is likely to be ethical; if not, stay clear!
After a healthy discussion on what ethics are and whether our Code of Conduct, rules and understanding of ethics are relevant in these times, a second ballot was cast. The answers were as follows:
Yes, we have an ethical profession 25 votes
No, we don’t have an ethical profession 29 votes
I thinks this leaves a lot to be considered!