The Politics of GOSSIP and Denial in INTERORGANIZATIONAL Relations

Human Relations
http://hum.sagepub.com The politics of gossip and denial in interorganizational relations

Ad van Iterson and Stewart R. Clegg Human Relations 2008; 61; 1117 DOI: 10.1177/0018726708094862 The online version of this article can be found at: http://hum.sagepub.com/cgi/content/abstract/61/8/1117
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Human Relations DOI: 10.1177/0018726708094862 Volume 61(8): 11171137 Copyright 2008 The Tavistock Institute SAGE Publications Los Angeles, London, New Delhi, Singapore http://hum.sagepub.com
The politics of gossip and denial in interorganizational relations

Ad van Iterson and Stewart R. Clegg
A B S T R AC T
Organizational gossip has largely been discussed in terms of effects at the individual level. In this article we turn our attention to the organization level. The article makes a research contribution that addresses gossip that spreads fact-based rumours about organizations in terms of their shifting role in circuits of power. The research question asks what happens when organizations ofcially formulate themselves as doing one thing while other organizational actors that are inuential in signicant organizational arenas (in which these formulations circulate) counter that these formulations are patently false. Theoretically, we draw on the literature on organizational gossip and rumour as well as on the politics of non-decision-making. Our argument is advanced by reference to a case study of the Australian Wheat Board and UN Resolution 661. Basically, organizational gossip plays a key role in the production of interorganizational power dynamics, an insight previously neglected.
K E Y WO R D S
Australian Wheat Board circuits of power Cole Inquiry non-decision-making organizational gossip organizational rumour
Introduction
Organizational gossip is an important but under researched topic. Empirical studies of gossip have been largely conducted in anthropology, social
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psychology, linguistics and communication studies. In organization studies, they are few and far between, although the idea of rumour management has been addressed in a number of studies (Houmanfar & Johnson, 2004, offers a good literature review). Studies of organizational gossip per se do exist, but these are mainly programmatic (e.g. Kurland & Pelled, 2000; Noon & Delbridge, 1993). Furthermore, these programmatic studies focus on gossip between individuals and groups within the organization. Typically, these theoretical contributions address gossip about either private matters of (mostly powerful and/or deviant) organizational members (Zijderveld, 1979) or interdepartmental frictions (e.g. established-outsiders gossip dynamics, Soeters & Van Iterson, 2002). Gossip spreading rumours (see Michelson & Mouly, 2000, 2001) about ofcial statements by managers and owners has been less researched, although Bordia et al. (2006) provide a recent literature review in the context of change management. We aim to enlarge these perspectives by focusing on gossip spreading fact-based rumour not intra-organizationally, but interorganizationally. The main reason for this extension is to explore whether and if yes, how politics of ofcial denial and non-decision-making of organizations may be countered by gossip originated in other organizations. We have chosen to explore interorganizational gossip via a case study since we believe that, when talking about the dynamics of rumoured gossip, the devil is in the details related to how shifting circuits of power are brought off, and only in such details will we understand the politics of gossiping and gossiped organizations further. Case work is vital in this regard. Our case concerns a situation in which organizational members produced an ofcially formulated account that was silent about and subsequently denied matter that had been raised by a competitor organization. Despite these silences and denials, the competitor organization continued to ventilate the gossip. Eventually, the rumoured gossip was ofcially enacted in public: it was formally communicated to agencies which have a statutory responsibility for the matters rumoured. One agency was a national government, while another was a special Inquiry instituted by the United Nations. The organization in question continued to deny the factuality of the gossip even as the rumoured matter moved into a formal allegation that was tested juridically. To analyse these indicated dynamics of ofcial statements that raise rumoured gossip by others, we borrow the distinction between formulation and gloss, drawn from the work of Garnkel (1967). Through formulations, people describe, explain, characterize, summarize, or otherwise tell what they are doing. Formulations typically arise when the determinate gist of a potentially multifaceted conversation has become problematic, and they regularly invite conrmation or denial (Heritage & Watson, 1979). Garnkel
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and Sacks (1970) argue that the deniteness of meaning formulated for a situated occurrence is created by the situation in which the account is given, with formulations being aided by glossing practices such as particular cases and stories illustrating the members device for making sense. Glosses, then, are second order accounts on other accounts that are ofcially formulated. In the context of our case we mean by formulations statements that are ofcially released as organizationally legitimate messages, while glosses are not ofcially formulated and are therefore not organizationally legitimated. Members and observers of organizations are relatively free to enact glosses on what the organization ofcially articulates. But these glosses have little formal status and impact unless they can be framed as ofcial formulations. Reports of rumoured gossip are signicant forms of gloss available to organizational actors. To the extent that organizationally powerful actors do not acknowledge the glosses circulating they can formulate any matter at hand as a non-issue. Formulations are embedded in highly authoritatively enacted circuits of power (Clegg, 1989). It is their routing rather than their content that provides for their ofcial nature. Thus, ofcial formulations are a form of ceremonial discourse by virtue of the artefactual and relational resources deployed. While the channels through which formulations may be issued are restricted, glosses can go anywhere they can travel widely and unrestrictedly. Our article asks what happens when ofcial formulations are widely glossed by gossip deriving from a competitor organization which rumours on the basis of what are later tested and shown to be facts that the ofcial accounts are patently false accounts. Can such rumoured gossip counter the other organizations politics of denial and non-decision-making? Or is it imperative for such glosses to rst enter the ofcial circuit itself to have such impact? Obviously, gossip is always inscribed in specic contexts. We chose as our context a country about which a great deal of unveried rumour of weapons of mass destruction and terrorism has occurred. The country is Iraq. However, rather than attend to the wars, international and civil, that have blighted the country, we looked at events that emerged around a set of trade relations. In particular, we looked at the sanctions imposed on Saddam Husseins Iraq that were authorized under the United Nations Security Council Resolution 661 passed on 6 August 1990. The sanctions were designed to save the lives of many children and other vulnerable Iraqi citizens by using a UN escrow account for the purpose of providing food and medicines. The events in question concerned a major international trading corporation, the Australian Wheat Board (AWB), with regard to violation of UN Resolution 661.
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As organizational gossip has been largely discussed in the literature in terms of individuals or groups in organizations we break new theoretical ground by shifting the empirical object of analysis up a notch to the organizational level. We concentrate, empirically, on gossip promoting a factual rumour involving a temporal chain of interrelated events undertaken by an organization. First, we will briey discuss some relevant literature. Second, we will elaborate the events of the case, seeking to make a simple narrative of what was a complex tale. Third, we shall analyse how events unfolded in the case, in terms of the politics of organizational non-decision-making. In the conclusion we will propose a possible circuitry of organizational gossip as an element in interorganizational power and politics.

In common parlance gossip and rumour carry mainly negative connotations (see Goodman & Ben-Zeev, 1994). Traditionally, gossipers were said to possess evil or back-biting tongues. Although gossipers do enjoy some popularity when their job is to spread rumours about the rich, famous and notorious via tabloids and other popular media, gossiping still does not rank among those human activities considered most eminent. In organizations it is especially regarded as an unproductive, unreliable and even dangerous form of communication, mainly due to its secretive and insubordinate quality. From a managerial perspective, gossip is generally assumed to be a problem. As far as many managers are concerned, gossip should be discouraged in the organization, or, even better, it should be eliminated. Organizational scholars have taken a more neutral stance. Kurland and Pelled (2000) dene organizational gossip as informal and evaluative talk in an organization, usually among no more than a few individuals, about another member of that organization who is not present (p. 429). Noon and Delbridge (1993) argue that gossip circulated in an organization context has not only been viewed as negative, but also as positive (see Rosnow & Fine, 1976).1 Noon and Delbridge follow Gluckman (1963) who claims that gossip serves three collective functions: i) to create group morale, establishing and vindicating group norms and values (see also Herskovits, 1937; March & Sevn, 1988); ii) to exert social control over newcomers and dissidents; and iii) to regulate conicts with rival groups. From this perspective, organizational gossip may be regarded as organizationally benecial. In a less strict functionalist vein it may be recognized that gossip can also help to reveal and alter existing power inequalities (Meyer Spacks, 1985) as well as help to release emotional tensions (Waddington, 2005). Further, it may well
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reduce uncertainty, and facilitate sensemaking and problem solving. In our article, however, we will explore whether and how interorganizational rumoured gossip may help by exposing political games that agencies play. We will try to demonstrate that once rumoured gossip has acquired the status of ofcial formulation it may impel (other) organizations to be more accountable and responsible. Whether true or false, rumoured gossip can enhance organizations value markedly (Pixley, 2004) or make them bankrupt witness the recent UK case of the run on the Northern Rock bank, which only stopped when the banks debts were effectively assumed by the government. Once scaled up to the organizational level especially when its rumours have bottomline implications gossip becomes an acute currency in the politics of organizations, an essential stratagem in the war by other means that so often constitutes interorganizational relations between rivals. Senior executives have a general duty of care with respect to rumours that suggest there is corporate wrongdoing in their organization. They have to foresee that harm might reasonably be visited upon the organizations value if nothing is done to prevent or deter ethically questionable behaviour by organizational ofcers. Accordingly, they have to act (as ethical practitioners) to investigate such rumours of wrongdoing. There can be legal implications if senior executives abuse their position in an endeavour to obstruct or manipulate information, which actions would later prove to cause detriment to the organization, something that became all too evident in the case in question. Formulations, glosses and gossip imply certain organizational politics and power games. In an inuential discussion, two American political scientists, Peter Bachrach and Morton Baratz (1970), presented the politics of non-decision-making as the second face of power. The rst face of power concerns the outcomes of decisive battles between different actors over specic issues, when an A gets a B to do something that B would not otherwise do. The second face is subtler: non-decision-making occurs when actors systematically do not attend to a phenomenon of which they have every reason to be cognizant. For reasons of organizationally structured mobilization of bias (Schattschneider, 1960: 71) their non-attention results in non-decision-making. The mobilization of bias is deeply embedded in all organizations; they will have ways of formally and informally enacting the salience of phenomena that could be constituted as within their purview, and these will determine both what will be enacted and what it will be enacted to be and not be. Some things will never make the political agenda as it is dened by dominant parties; they are, either implicitly or explicitly, ruled out of bounds; hence they are not raised. To adapt Haugaards (2003) terms, in
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such situations existing elites do not collaborate in the reproduction of some issues as phenomena to be taken seriously. Only those issues that conform to the dominant myths, rituals and institutions of the politics that they promulgate will be admitted. Important issues that challenge these dominant ideas will not be acknowledged. Their exclusion from consideration signals the neglected second face of power. Politics is done and power is exercised not just by doing things but also by not doing things. If analysis is restricted merely to those issues which elites sanction and ofcially formulate and we do not attend to those informal mechanisms for resisting these accounts in this case the spread of a gossip we will miss the ways in which organizational power relations seek to restrict agendas to dominant mobilizations of bias (Friedrich, 1937). What is left unsaid in accounts positioned as legitimate, ofcial and authoritatively formulated is sometimes more important than what is carefully articulated.
Case methods and analysis

A Royal Commission of Inquiry, known as the Cole Inquiry (after the name of the Commissioner, Mr Terence Cole), was established into allegations about the role of certain Australian companies into what became known as the Oil-for-Food case. The Royal Commissions public hearings began in mid-January 2006 and continued through to the end of September that year. Transcripts of the entire proceedings, from December 2005 to September 2006, are posted on an ofcial government website [http://www.of.gov.au/ agd/WWW/unoilforfoodinquiry.nsf/Page/Transcripts]. The authors followed the case day by day, reading and listening to the media reports and crosschecking the transcripts as they were posted. Major landmarks in the progress of the inquiry were the cross-examinations in the rst six weeks of public hearings by Counsel Assisting Commissioner Cole, Mr John Agius, of witnesses from the AWB that revealed conduct that was highly questionable, including photographic evidence of senior executives posing with guns and suitcases of money in the back of four-wheel drive vehicles in Iraq. Witnesses from the AWB frequently claimed memory loss, inability to locate diaries and notes and notoriously, in the case of former AWB Limited board chairman, Mr Trevor Flugge, hearing loss, which he claimed, somewhat implausibly, left him unable to say what conversations he had been privy to. Early in 2006, on 6 February, the inquirys terms of reference were extended to include the activities of companies in the BHP Billiton Group and other associated companies. Shortly thereafter, on 16 February 2006, Commissioner Cole invited broadcast media into the inquirys hearing room to
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record an invitation for anyone with information about kickbacks or the Iraqi oil-for-food scandal to appear before his inquiry. In April 2006 key members of the government, including the Prime Minister Mr John Howard, the Foreign Minister, Mr Alexander Downer, and the Trade Minister, Mr Mark Vaille, were cross-examined. Of course, what was admissible evidence was circumscribed by the terms of reference of the Inquiry, which were tightly circumscribed. The authors proceeded with data collection by reading the daily reportage of the Inquiry during the course of its public hearings (the precise dates of which are posted on the government website); listening to its discussion on current affairs and news media, and checking the transcripts on the website. An initial approach was to analyse the transcripts themselves but the sheer volume of material made this too unwieldy a process for journal article treatment. Instead, we resolved to address the ndings, taking the fact that they were juridically constructed as a warrant of their truth value for all practical purposes. In other words, we traded off the institutional legitimacy afforded such arenas as Royal Commissions of Inquiry and their ndings. Our task then was to construct a narrative in which the main points of theoretical issue were heightened; that is, we constructed the narrative as an explicitly theoretical tale rather than as a recitation of events, unfoldings, ndings, and characters. We had to suppress many aspects of the case that were fascinating in terms of local politics but which did not illuminate the pattern we sought to construct by weaving together the analytic concerns for the analysis of gossip and the politics of its construction, circuitry and interpretation. Hence, the account that follows, while true in the sense of being juridically certied, is a theoretical narrative constructed from the range of accounts that circulated in and around the Cole Inquiry. We would want to argue that there is considerable scope for social scientic analysis that uses such ready-made socially constructed materials as its data. Just as what are socially constructed as ofcial statistics and their interpretation may be a rich source of social science data so too may be what are socially constructed as ofcial accounts and their interpretation.
The Oil-for-Food case

The Oil-for-Food program, which the UN sanctioned through Security Council Resolution 661, was an escrow account set up to pay for humanitarian relief for the Iraqi people during the UN blockade of Iraq, prior to the second Gulf War. Trade with Iraq at this time was only legitimately and legally possible through the supervision of the UN as a result of this resolution. The
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Saddam regime responded by extracting bribes from competing food marketers, of whom the most signicant were the wheat marketers, delivering the staple of everyday life into the region from the vast acreages of the USA, Canada and Australia. The international market was very competitive and was clearly not a free market, given its administration through the UN and the effects of the sanctions. Persistent gossip in and around the UN was initiated by Canadian wheat marketers and then picked up by US wheat marketers and politicians, rumouring that from as early as 1998 the Oil-for-Food program was being systematically abused, and that the major miscreant was the AWB. The gossip rumoured by the Canadians intimated that the Australians were bribing their way into a market that was proving to be inaccessible without the benet of bribes. AWB answered the gossip by saying that the claims were unfounded and, moreover, mischievous. The Canadian and American wheat growers organizations and representatives were the prime international competitors of Australian wheat farmers, and thus self-interestedly sullying the reputation of the AWB. After this AWB formulation, similar reassurances were widely repeated by Australian government representatives. After these ofcial denials were issued, the AWB share price rose strongly. Felicity Johnston, a British diplomat with the UN Oil-for-Food program, identied that in 1999 she rst heard gossip, which had begun to circulate in the UN, claiming that the AWB was in breach of the program as a result of allegations initially raised by the Canadian Mission to the United Nations. In her words the AWB: [W]ere paying, it transpires later, a transportation company to bring the goods to the governorates within Iraq. However, my understanding, after the affair is over, is that this is a company that was introduced to them by the government of Iraq, that the rates for the transportation were specied by the government of Iraq, that any increases in those rates were specied by the government of Iraq, that in fact the whole operation was a shadow of the government of Iraq, and I think that it was rather disingenuous of them to categorically respond that they were not engaged in making payments to the government of Iraq when they clearly were. (Jones, 2006) In 2005, the rumoured gossip was substantiated by the United Nations Independent Inquiry Committee which had been formed at the instigation of US Republican wheat belt representatives to investigate allegations of Oilfor-Food Program corruption and fraud. The Inquiry was chaired by the
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respected US ex-Secretary of the Treasury, Paul Volcker. His report, released in October 2005, found that AWB was the biggest single source of kickbacks made to the Iraqi government. The Volcker Inquiry found that over $300 million was paid in trucking fees to a Jordanian rm called Alia, which was majority owned by the Iraqi Hussein government, and did little or no trucking but acted as a conduit for bribes. As a result of the Volcker Inquiry ndings the Australian government was obliged to act; Volckers determinations could not simply be ignored for they had made an issue out of something that had been treated by the AWB and the government as a non-issue. The government response was to constitute a Royal Commission of Inquiry with strictly circumscribed terms inquiring into certain Australian companies in relation to the UN Oil-for-Food Programme, established under the Royal Commissions Act 1902, and known as the Cole Inquiry. The terms of reference were to inquire whether decisions, actions, conduct or payments by Australian companies mentioned in the Final Report (Manipulation of the Oil-for-Food Programme by the Iraqi Regime) of the Independent Inquiry Committee into the United Nations Oil-for-Food Programme breached any Federal, State or Territory law. Notably, they did not touch on the role of government or the public service. One may be certain that this exclusion by the government was quite deliberate; that there was any kind of enquiry was largely a result of the Volcker Report to the UN; that such an Inquiry could not be avoided after these ndings became public was inevitable but the restriction of the terms of reference to exclude the government and public service meant that there could not be any formal attribution of responsibility to these bodies. The $300 million was paid to ensure the sale of Australian wheat in Iraq. In making these payments it seems that the AWB was complicit in a particularistic interpretation of trade regulations that constituted a mock formalism adjusted to their understanding of what it took to do business in the Middle East (Veiga et al., 2004). The trucking fees, although paid out of the UN escrow accounts, were claimed as tax write-offs from the Australian Tax Ofce as facilitation payments. The Cole Inquiry saw government Ministers and the Prime Minister (note that at the beginning of its bribing Alia, the AWB was still a government instrumentality) carefully articulate under conditions of ofcial interrogation that they were never formally informed about the scandal and knew nothing about it. It also saw the Cole Inquiry establish that 21 diplomatic cables had been received by government ofcials in DFAT (Department of Foreign Affairs and Trade) alerting them to the rumoured offences. These servants of government and the governments Prime Minister, Foreign Minister and Minister for Trade claimed that, despite the cables, they knew nothing about the rumoured
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gossip, that nothing had been formally raised with them, and that they had received repeated assurances from AWB that the gossip was incorrect. DFAT claimed not to have known formally what the AWB was alleged to have been doing. DFATs position, unusually for a political organization, was to represent itself as only a formal organization, as an arena in which gossip did not circulate. Thus, the accounts presented to the Cole Inquiry by senior Ministers proposed that DFAT was an organization in which the diplomatic reports and cables that reported the rumours, despite circulating within the organization, did not become the subject of informal discussion. With respect to interpretation of the AWBs actions, the constant informal, deniable buzz that goes on orally between senior intelligence ofcials and ministers or their staff (Kevin, 2006) was represented by senior government gures as a gossip-free zone in the corridors of an environment which, it is well documented, thrives on rumoured gossip (Watson, 2002). It is evident from the Cole Inquiry that the government witnesses could not recall much of moment and that there was a superabundance of things that they were not formally told. The Cole Inquiry established that many of AWBs senior executives were fully cognizant of the fact that they were engaged in an arrangement that they did not wish people in positions of authority to know about (Jones, 2006). In an interview conducted while the Cole Inquiry was still sitting, one of the witnesses called to the Inquiry, the aforementioned British Diplomat on the Oil-for-Food Program, Felicity Johnston, noted that by 2001 rumours were circulating but no one would ever go on the record (Jones, 2006). Only after the Volcker Inquiry did these rumours become a matter of fact, which was corroborated by the subsequent Cole Inquiry. As Marr and Wilkinson (2006) report, the account of the AWB established in the Cole Inquiry was an almost perfect example of the politics of non-decision-making, a story dened at every stage by what was not done, by government, DFAT, and the AWB Board, none of whom enquired closely about the trucking fees. The initial formulation made by the government was that the rumoured gossip was an underhand piece of competitive strategy. The Prime Minister was to say, Attacking the behaviour of ones trade competitors in the international wheat trade is fairly common (Marr & Wilkinson, 2006: 11). Thus, the gossip was not taken seriously as an allegation whose claim was to be investigated. Instead, the overriding account provided by senior government members was couched in terms of competitive strategy shaping competitor accounts. The AWBs ofcially formulated denial of the gossip then became the basis for a further refusal to acknowledge the contents of the communications the 21 cables that continued to be sent to DFAT. Although these arrived in the building they were not enacted. Senior bureaucrats knew that
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the Minister did not want to have them brought to his attention, operating as he was on a need not to know basis. The Minister, a member for the farmers party the National Party seemed sympathetic to the AWB point of view that the key issue was the continuing successful sale of Australian wheat to the Iraq government and that no other considerations were more important. The Australian government, despite what circulated in the UN and Canberra, could simply deny that they were ever formally advised of the gossip that was transmitted in the 21 cables that advised DFAT of UN suspicions. Although these cables had been received it was claimed that their contents were never formally communicated to senior government members. The AWB had, at the outset, formally denied the gossip and that seemed to be the end of the matter. Indeed, it might well have been, had it not been for the American persistence that saw the Volcker Inquiry instituted. The rumoured gossip had now moved into a formal circuit of power that neither the Australian government nor its bureaucracy could deny or control. When government members were eventually confronted in the witness box at the Cole Inquiry with damning details of the contents of the cable communications, recollections simply failed. For instance, the Foreign Minister, Mr Alexander Downer, said more than 20 times that he had no specic recollection of cables, key conversations or events surrounding the scandal. He could not specically recall seeing the cables that were sent to his ofce warning that AWB might have been paying kickbacks to Husseins regime in violation of UN sanctions. As far as he could recollect he was never formally advised of anything to do with the unfolding scandal. Cables and e-mails may have been received but were never brought to his formal attention. By not attending to these data, a concerted effort to ensure that they remained non-issues for non-decision-making can be seen. Every attempt was made to ensure that the gossip was not registered within governmental circuits of power. For as long as it oated free, as a signier that formal actor networks were reluctant to enrol, translate and literally domesticate (Callon, 1986), it could continue to be framed in terms of competitive strategy. Framed thus, the organizational response was denial on both the part of the AWB and all those Australian government agencies that dealt with the AWB. The rumoured gossip that circulated in those cables, faxes and e-mails that was received but never attended to, because it was never formally acknowledged, could be denied the status of an issue. It was, literally, constructed as a non-issue. However, once the gossip moved into legal circuits of power and outside the arena of governmental administrative power, its precise status as issue or non-issue came into central focus.
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There is a whole politic of gossip and denial involved in this account. What is at issue are a series of transitions the most important of which was the transformation from gossip as a rumoured gloss (on a formal formulation of denial) to a formal formulation that stands as an allegation which then became the subject of legitimate determination. In the next section we shall deconstruct the route from the Canadian Wheat Marketers gossip to the Royal Commission.
Discussion: Tracing the case and attributing power and responsibility

It is clear where the rumour of AWBs malfeasance began: in gossip about the AWB by Canadian Wheat Marketers in the late 1990s. The gossip was not legitimated by any agency at this stage because it was not ofcially formulated; it remained a gloss on the formal accounts that the AWB provided, that they were winning sales through efcient marketing. From the Canadian Wheat Marketers the rumoured gossip travelled in two directions. First, it crossed the Pacic to Australia, where it was denied by the AWB and later dismissed by the Prime Minister as competitive strategy. Second, the gossip started to circulate in New York in the UN, where it was picked up by Australian representatives who raised the matter as an issue with DFAT, from whom they sought clarication; this came in the form of securing counter-factual assurances from the AWB. On the basis of the initial denial of responsibility the governments policy, transmitted to DFAT, was to ignore further claims. The gossiped rumours of the Canadian Wheat Marketers were thus translated, variously, by the government as competitive strategy, by DFAT as questions put to the AWB which translated into denial, and which, on that basis, became the stock position of the Australian government and its agencies that they had tested the gossip by seeking clarication from the AWB and the AWB had assured them that it was false. Once the gossip began to circulate in the UN it travelled freely out of the UN building and into the United States, where US Wheat Marketers made sure that their political representatives heard about it. They, in turn, pressured the United Nations to investigate the Oil-for-Food program, with the result that the UN established the Volcker Inquiry, which identied systematic corruption of the Oil-for-Food program and implicated the AWB. With the institution of the Volcker Inquiry the gossip changed status from being an informal gloss to being ofcially formulated and legitimated. According to Australian government accounts, when the claims were initially raised within the UN they were presumed to be merely gossip but
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when the Volcker Inquiry was established as a result of US political pressure, the gossip was translated into a formulation as a formal allegation. The allegation was tested and its legitimacy established by the Volcker Inquiry. The Australian government could exercise legitimate authority in its sovereign space and control the rumoured gossip by denying it or labelling it as merely a competitive strategy. But it could not control the translation of the gossip as claims raised in the UN and investigated by Volcker. The approach of not attending to the allegations no longer had any credibility once the Volcker Inquiry addressed and conrmed them. The non-issue had become an issue because of the actions of organizational agencies extraneous to the Australian government and the AWB. After Volcker reported to the UN, the Australian government establishment of the Cole Inquiry made what had been a non-issue a domestic issue. At this point the whole farrago of gossip, rumour, denial claims of competitive strategy, allegations and ndings became subject to juridical determination under the terms of reference established for the Commission, which pointedly did not entail inquiry into the governments role.2 That remained a non-issue. While the gossip was undoubtedly a mobilization of bias on the part of rivals excluded from the grains contracts so was the response of the Australian government in not allowing enactment of the 21 cables that Cole identied. What was not done was the making of an issue out of a rumoured gossip; what was done was the making of a non-issue. Evidently, the whole process of rumoured gossip, allegation, denial, counter-charge, allegation, and ndings was irrevocably political. The strategies used by the key Australian players denial by the AWB and systematic non-attention by the Australian government were an integral part of a wholly political process, in organizational terms. It is, indeed, difcult to separate gossip from allegation, strategy and determination because once the gossip started to ow it was irrevocably political. Hence, we have identied a phenomenon neglected in the organization literature the political role of interorganizational gossip in spreading rumoured gossip factbased and making issues out of what other organizations constitute as non-issues. One of the major mechanisms for the subtle exercise of power in and among organizations is enacted through the formal politics of ofcial recognition; as long as some issues are never formally recognized as such, as issues, then the politics of silence can be used to absolve political actors of responsibility. This was the key move made by the Australian government in the AWB affair, demonstrating a classic politics of non-decision-making. One of the ways in which what Brunsson (1994) terms organizational hypocrisy is produced consists of organizations categorically denying gossip
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and rumours, in terms of the public record. Especially where multiple glosses of a formulation circulate, and where there is a conspicuous difference between the facts of the matter that are promulgated in the different accounts, there is ample opportunity for the politics of non-decision-making. In fact, it is precisely in such circumstances that, organizationally, we are most likely to nd such politics. At the same time, organizational others have no recourse other than to unofcial glosses by virtue of the fact that an existing account has been constructed as formal and thus legitimate. Nevertheless, to treat competing accounts as non-issues is, as we have seen, a dangerous and unstable organizational politics. What is critical is if the rumoured gossip becomes an allegation. Rumoured gossip can circulate anywhere from anyone; allegations are much more explicit. As a legal term, an allegation is an assertion, especially relating to wrongdoing or misconduct on somebodys part, which has yet to be proved or supported by evidence. While gossip might circulate in a liminal space, an allegation is in the public sphere and can be contested. Rumoured gossip becomes allegation if it is denied by the parties being rumoured about and then they are repeated after that denial in a juridical context. Good management should seek to ensure that its affairs do not become the province of legal determination because once they do they are outside of the control of the managers. That is why the strategy of non-decision-making is risky. The strategy creates a non-issue and, unfortunately for those organizations that have the hubris to imagine that their mobilization of bias can maintain the present equilibrium, they often spiral out of control, as competing accounts circulate. Strategically, ignoring them may seem like a good idea, but accounts/glosses travel, and sometimes if they have powerful sponsors they will end up in a juridical arena. That is where the end game begins: the questionability of rumoured gossip of what is taken to be a rival account of matters of fact will be tested. Organizationally, the ofcially formulated accounts can only maintain their legitimacy if the entity that issued them deems itself slandered or libelled; the party that considers its truth claims to have been dishonoured can seek formal deliberation of the matters alleged. Once an allegation is made and enters into a formal administrative setting it becomes procedural, with the circuitry of administrative power implicit in its airing in whatever fora, making it an allegation. And allegations make issues out of non-issues in a way that glosses, such as rumoured gossip, do not. In Foucault (1972) we nd actors framing consent to an interpretative world-view within a particular world-view or episteme. As we have sought to argue in this article, such work also goes on every day in far more mundane parlance in rumoured gossip, counter-claims, denials, allegations, inquiry
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ndings and legally binding determinations. In Lukess (2005) terms, while power is always aligned with responsibility, it is only at the latter point of legally binding determination that we can be unequivocal about their attribution. However, the whole progression, from organizational gossip onwards, is a political game seeking to build a specic locally grounded truth claim. It is in this way that the rules of the game which decide what is legitimate or illegitimate are interpreted. As we have tried to show, the whole process is one of power relations moving and owing through different circuits of formulation and gloss, seeking to x legitimacy. What is constituted as formulationally legitimate in this case creates both causal powers and attributions of responsibility. The strategic movement from gloss through formulation and into that space in which allegations can become determinations is where de facto legitimacy is created. Some fundamental patterns are revealed by the analysis. For organizations that spread and sponsor gossip about competitors the target is usually to unveil and oftentimes also undermine the actions of these organizations. For the organization that is being unveiled and undermined, the options are several. The rumoured gossip can be denied. It may be conceded in part but questioned in interpretation. Or a clean breast can be made. For the organization being gossiped about, as long as the gossip is not on the record it cannot be attributable formally, organizationally. Even as the gossip circulates and informs opinion, it can always be denied in terms of what is on the formal record. Unless and until it is formally registered as a specic allegation the truth-claims constituted in rumoured gossip can be denied. Thus, as long as the gossip never routes through any circuits of power that can authenticate their provenance, they can be rebuffed and constituted as non-issues. For any organization about which rumoured gossip circulates, after the rst denial and with the same management team, there will often be circumstances in which it is irrational to do anything other than to continue denying, as Benoit (1995) suggests. The circumstances in which this is not a wise strategy arise when there is the possibility that ones ofcially formulated accounts may have to be defended in a court of law against what is rumoured, as we have argued. Consequently, any organizations top management team has to act in the here-and-now in ways that they know might be seen as defensive and guilty strategies in some future context. The probable impact of the circulation, let alone the verication, of rumours on the share price is hardly likely to be in the interests of shareholders. Sillince (2007) suggests that the important questions to ask of any unfolding story are when, where, who, and why? In the AWB case, the crucial when occurred with the deliberations of the Volcker Inquiry; the critical where was the fact that it took place under the authority of the UN, while
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the signicant whos included senior and allied diplomats and government ministers and ofcials, while the overall plot device the why had to do with the struggle to win the lucrative Iraqi grains market. Thus, the political stakes were very high and the characters enrolled in the rumoured gossip extremely powerful and senior.
Conclusion
In conclusion, this article aimed to theorize about a possible circuitry of organizational gossip as an element in interorganizational power and politics. First, an organization A circulates a claim, X, about organization B as gossip which has no formal or ofcial status. Nonetheless, it circulates and is widely distributed. Organization B, on hearing the gossip, raises an ofcially formulated account about the actions which gossip X addresses. Thus, organization B simultaneously denies the substance of X while acknowledging its circulation; thus it enacts the gossiped action X to a formal status that it previously did not have. The gossip X, which previously circulated as a glossed issue, has now been constituted as a formulated non-issue by its denial. When called to account about the issues raised in gossip about X, organization B merely repeats its formulation that X is a non-issue, to all who ask for clarication. Thus, organization B never formally accepts that the gossiped issue X has any credence at all. That it is formulated as a nonissue becomes its chosen obligatory passage point. As we have seen in the case analysis, rumoured gossip may then enter into a political limbo in which its presence is not registered. Limbo, of course, is closely related to the liminal, the ambiguous condition of being in between, sharing the same Latin root (Cunha & Cabral-Cardoso, 2006). Matters might often rest in limbo, unless there is the irruption of some other agency into the arena that these politics have constituted, such as investigative journalists, juridical bodies, or other agencies that do not simply accept ofcially formulated accounts. When such agencies are able to raise issues in a court of some kind, either the court of public opinion or one legally constituted as such, the non-issue is translated once more into an issue in so far as the attribution of responsibility can be posited. Even in sophisticated organizational power games, power always comes down to matters of responsibility, as Lukes (2005) suggests. The whole process we have analysed was one of power relations moving and owing through different circuits of formulation and gloss. Basically, organizational gossip plays a key role in the production of interorganizational power dynamics, an insight previously neglected.
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An important qualication to Cleggs (1989) original formulation of the circuits of power model is in order. It is far too static even as it seeks to represent a play of ows. The arena of social relations that kick-starts any episodic power event never starts from any xed point. Some actors in the arena are constantly seeking to x social relations (such as the AWB securing the wheat market for Australian grain growers), but there are always other forces working to destabilize and unx these relations (such as the Canadian grain growers). And the episodic power relations that they initiate may well be wholly outside the formally stabilized relations in which power has been vested. Indeed, in as much as these relations are xed a key strategy for unxing them may well be the strategy of white-anting by rumour mongering nibbling at the foundations on which the xity depends. The starting point of any power relation, let alone the concept itself, is essentially contested in practice. More often than not, in any stabilized eld of interorganizational relations, contestation of existing power relations will likely be organizationally outanked by the structuration of these relations in their immutability. However, in arenas such as Iraq under Saddam after the rst Gulf War, the eld was hardly stabilized as the state had established neither rational legal authority nor efcient markets. In the absence of these, interorganizational relations were more accountable in their representation than their reality. For as long as these relations could be represented as in accord with Resolution 661 the reality of their positioning hardly mattered. And for as long as the bribes silenced the local and corrupt elites who were enrolled in the wheat sales, and there was no other circuit than the corrupted market through which trade owed, the actions of those excluded from the arena by the acts that had stabilized the existing circuits of power were of no account. And that might have been the end of the story had not the whole business been conducted under the auspices of the UN, who opened up another arena in which gossip could be vented and countervailing interests enrolled. Thus, any model of circuits of power must start from the realization that any given arena that which Clegg (1989) represents as stabilized by the episodic power circuit necessarily intersects with many other episodic circuits in which what is stable and taken-forgranted in one circuit may well be deconstructed and destroyed. Hence, the 1989 model was too static there is no xed starting point for episodic power these are always points in a contextually shifting here and now constantly redened by prospective and retrospective sensemaking (Schutz, 1967; Weick, 1995). Moreover, episodes of power can start wholly outside the formally established relations between organizations, and episodic circuits tend to intersect. However much an organization may assume that it has stabilized the circuits of power owing through a specic arena, that
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arena is always capable of being recongured by other circuits, other actors and gossip plays a key role in these relations. Politically astute managers should be well aware of these things and have communication strategies in place that stabilize messages across all potential episodic circuits that might inuence their actions, rather than go for quick wins where they can. They need to be well aware of gossips role as a political strategy, for, as Lukes (2005) claims, the exercise of power always entails matters of responsibility as a choice is made to do one thing and not another thing. They would do well to recall that, in antiquity, as Seneca (1999) remarked (and as Butler [2005] reiterated for modernity), responsibility implies an essentially social and future perfect oriented calling to account of how what is done and seemingly past will be reconciled with what has not yet, but very well might be, said in the future. To be responsible means, as Messner (2007) suggests, acting to frame the limits of what is possible and impossible. Choices are always potentially consequential where there are observers and commentators on the choices that organizations make. Given these pointers, neither the AWB nor the Australian government proved themselves to be especially sophisticated or responsible managers. The former lost their case while the latter were later to lose ofce. Glosses trumped formulations once they entered into formal circuits of power. Interorganizational gossip is an essential tool for the politics of resistance to formally constituted power relations.
Acknowledgement
The authors would like to thank all their colleagues in the several places at which they have presented these ideas for their comments on earlier drafts. The authors would also like to acknowledge helpful comments from Robert R. Roe, Nelson Phillips, Carl Rhodes, Alison Pullen, John Sillince, Tyrone Pitsis, Martin Kornberger, Marie-France Turcotte, John Garrick, Miguel Cunha and Angus Young, as well as the handling editor and three anonymous reviewers at Human Relations.
Notes
1 Notably, negative gossip is often seen as a specically feminine activity while gossip as a positive discourse seems more masculine in its projections (see Kanter, 1977; Sotorin & Gottfried, 1999). The ndings of the inquiry were tabled on 27 November 2006 in the House of Representatives in Canberra and it was recommended that legal authorities should consider criminal prosecutions against AWB Ltd and 11 senior company executives, whose conduct may have involved being accessories to criminal behaviour or
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breaching the Corporations Act. Commissioner Cole blamed the companys internal corporate culture. The question posed within AWB was: What must be done to maintain sales to Iraq. The answer given was: Do whatever is necessary to retain the trade. No one asked, What is the right thing to do? Commissioner Cole said AWB disguised the kickbacks to the Iraqi Regime and sought to hide them from the Federal Government and the United Nations. Necessarily one asks, Why? The answer is a closed culture of superiority and impregnability, of dominance and selfimportance (Davis, 2006: 1). The Report recommended that the government should in the future seek to enforce UN sanctions more robustly and that a special enforcement branch investigate breaches, with tougher penalties established for companies engaged in sanctions busting and misleading the government on export permits. DFAT was criticized because its ofcers failed to follow up allegations that AWB was breaching UN sanctions. In fact, DFAT had no mechanisms for testing the veracity of what was being gossiped about. All it did was to seek assurance from the AWB that the allegations were unfounded (Wilkinson & Coorey, 2006).
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Ad van Iterson graduated in sociology at the University of Amsterdam. He received his PhD with a thesis on labour control in the early factory system. Ad is currently an Associate Professor at the Faculty of Economics and Business Administration, Maastricht University. His academic work has focused on the neo-institutionalist concept of national business systems. In particular, he wrote on the Dutch and Belgian business system. Presently, his attention has shifted to micro-sociological processes in organizations, such as organizational gossip, cynicism and informalization. This has resulted, amongst others, in The civilized organization: Norbert Elias and the future of organization studies (Amsterdam/Philadelphia, PA: Benjamins, 2002, co-edited with W. Mastenbroek, T. Newton and D. Smith). He has also published ction. [E-mail: a.vaniterson@os.unimaas.nl] Stewart R. Clegg completed a rst degree at the University of Aston (1971) and a doctorate at Bradford University (1974). Stewart is currently a Professor at the University of Technology, Sydney, and Director of ICAN Research (Innovative Collaborations, Alliances and Networks Research), a Key University Research Centre. He also holds Chairs at Aston University, and is a Visiting Professor at Maastricht University, the Vrije Universiteit, Amsterdam, and EM-Lyon, France. He also enjoys a Visiting Appointment at Copenhagen Business School, Denmark. He has published extensively in many journals and has contributed a large number of books to the literature, including the award-winning Handbook of organization studies (SAGE, 2nd edn 2006, co-edited with C. Hardy, W. Nord and T. Lawrence). His most recent books are Managing and organizations: An introduction to theory and practice (SAGE, 2005, co-authored with M. Kornberger and T. Pitsis) and Power and organizations (SAGE, 2006, co-authored with D. Courpasson and N. Phillips). [E-mail: stewart.clegg@uts.edu.au]

The Politics of GOSSIP and Denial in INTERORGANIZATIONAL Relations

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