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http://hum.sagepub.com Human Relations DOI: 10.1177/0018726708094862 2008; 61; 1117 Human Relations Ad van Iterson and Stewart R. Clegg The politics of gossip and denial in interorganizational relations http://hum.sagepub.com/cgi/content/abstract/61/8/1117 The online version of this article can be found at: Published by: http://www.sagepublications.com On behalf of: The Tavistock Institute can be found at: Human Relations Additional services and information for http://hum.sagepub.com/cgi/alerts Email Alerts: http://hum.sagepub.com/subscriptions Subscriptions: http://www.sagepub.com/journalsReprints.nav Reprints: http://www.sagepub.co.uk/journalsPermissions.nav Permissions: http://hum.sagepub.com/cgi/content/refs/61/8/1117 Citations by on June 23, 2009 http://hum.sagepub.com Downloaded from

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http://hum.sagepub.com

Human Relations

DOI: 10.1177/0018726708094862 2008; 61; 1117 Human Relations

Ad van Iterson and Stewart R. Clegg The politics of gossip and denial in interorganizational relations

http://hum.sagepub.com/cgi/content/abstract/61/8/1117 The online version of this article can be found at:

Published by:

http://www.sagepublications.com

On behalf of:

The Tavistock Institute

can be found at:Human Relations Additional services and information for

http://hum.sagepub.com/cgi/alerts Email Alerts:

http://hum.sagepub.com/subscriptions Subscriptions:

http://www.sagepub.com/journalsReprints.navReprints:

http://www.sagepub.co.uk/journalsPermissions.navPermissions:

http://hum.sagepub.com/cgi/content/refs/61/8/1117 Citations

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Page 2: The Politics of GOSSIP and Denial in INTERORGANIZATIONAL Relations

The politics of gossip and denial ininterorganizational relationsAd 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 organiz-

ations in terms of their shifting role in circuits of power. The research

question asks what happens when organizations officially formulate

themselves as doing one thing while other organizational actors that

are influential in significant 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 � organizationalrumour

Introduction

Organizational gossip is an important but under researched topic. Empiricalstudies of gossip have been largely conducted in anthropology, social

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Human Relations

DOI: 10.1177/0018726708094862

Volume 61(8): 1117–1137

Copyright © 2008

The Tavistock Institute ®

SAGE Publications

Los Angeles, London,

New Delhi, Singapore

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psychology, linguistics and communication studies. In organization studies,they are few and far between, although the idea of rumour management hasbeen addressed in a number of studies (Houmanfar & Johnson, 2004, offersa 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 gossipbetween individuals and groups within the organization. Typically, thesetheoretical 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 official statements by managers and owners has been less researched, although Bordia et al. (2006) provide a recentliterature review in the context of change management. We aim to enlargethese perspectives by focusing on gossip spreading fact-based rumour notintra-organizationally, but interorganizationally. The main reason for thisextension is to explore whether – and if yes, how – politics of official denialand non-decision-making of organizations may be countered by gossiporiginated in other organizations.

We have chosen to explore interorganizational gossip via a case studysince 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 broughtoff, and only in such details will we understand the politics of gossiping andgossiped organizations further. Case work is vital in this regard. Our caseconcerns a situation in which organizational members produced an officiallyformulated account that was silent about and subsequently denied matterthat had been raised by a competitor organization. Despite these silences anddenials, the competitor organization continued to ventilate the gossip.Eventually, the rumoured gossip was officially enacted in public: it wasformally communicated to agencies which have a statutory responsibility forthe matters rumoured. One agency was a national government, while anotherwas a special Inquiry instituted by the United Nations. The organization inquestion continued to deny the factuality of the gossip even as the rumouredmatter moved into a formal allegation that was tested juridically.

To analyse these indicated dynamics of official statements that raiserumoured gossip by others, we borrow the distinction between ‘formulation’and ‘gloss’, drawn from the work of Garfinkel (1967). Through formu-lations, people describe, explain, characterize, summarize, or otherwise tellwhat they are doing. Formulations typically arise when the determinate gistof a potentially multifaceted conversation has become problematic, and theyregularly invite confirmation or denial (Heritage & Watson, 1979). Garfinkel

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and Sacks (1970) argue that the definiteness of meaning formulated for asituated occurrence is created by the situation in which the account is given,with formulations being aided by glossing practices such as particular casesand stories illustrating the members’ device for making sense. Glosses, then,are second order accounts on other accounts that are officially formulated.

In the context of our case we mean by formulations statements thatare officially released as organizationally legitimate messages, while glossesare not officially formulated and are therefore not organizationally legit-imated. Members and observers of organizations are relatively free to enactglosses on what the organization officially articulates. But these glosses havelittle formal status and impact unless they can be framed as official formu-lations. Reports of rumoured gossip are significant forms of gloss availableto organizational actors. To the extent that organizationally powerful actorsdo not acknowledge the glosses circulating they can formulate any matter athand as a non-issue.

Formulations are embedded in highly authoritatively enacted circuitsof power (Clegg, 1989). It is their routing rather than their content thatprovides for their official nature. Thus, official formulations are a form ofceremonial discourse by virtue of the artefactual and relational resourcesdeployed. While the channels through which formulations may be issued are restricted, glosses can go anywhere – they can travel widely and un-restrictedly. Our article asks what happens when official formulations arewidely glossed by gossip deriving from a competitor organization whichrumours – on the basis of what are later tested and shown to be facts – thatthe official accounts are patently false accounts. Can such rumoured gossipcounter the other organization’s politics of denial and non-decision-making?Or is it imperative for such glosses to first enter the official circuit itself tohave such impact?

Obviously, gossip is always inscribed in specific contexts. We chose asour context a country about which a great deal of unverified rumour – ofweapons of mass destruction and terrorism – has occurred. The country isIraq. However, rather than attend to the wars, international and civil, thathave blighted the country, we looked at events that emerged around a set oftrade relations. In particular, we looked at the sanctions imposed on SaddamHussein’s Iraq that were authorized under the United Nations SecurityCouncil Resolution 661 passed on 6 August 1990. The sanctions weredesigned to save the lives of many children and other vulnerable Iraqi citizensby using a UN escrow account for the purpose of providing food andmedicines. The events in question concerned a major international tradingcorporation, the Australian Wheat Board (AWB), with regard to violation ofUN Resolution 661.

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As organizational gossip has been largely discussed in the literature interms of individuals or groups in organizations we break new theoreticalground by shifting the empirical object of analysis up a notch to the organiz-ational level. We concentrate, empirically, on gossip promoting a factualrumour involving a temporal chain of interrelated events undertaken by anorganization. First, we will briefly discuss some relevant literature. Second,we will elaborate the events of the case, seeking to make a simple narrativeof what was a complex tale. Third, we shall analyse how events unfolded inthe case, in terms of the politics of organizational non-decision-making. Inthe conclusion we will propose a possible circuitry of organizational gossipas an element in interorganizational power and politics.

The politics of gossip and denial

In common parlance gossip and rumour carry mainly negative connotations(see Goodman & Ben-Ze’ev, 1994). Traditionally, gossipers were said topossess ‘evil’ or ‘back-biting’ tongues. Although gossipers do enjoy somepopularity when their job is to spread rumours about the rich, famous andnotorious via tabloids and other popular media, gossiping still does not rankamong those human activities considered most eminent. In organizations itis especially regarded as an unproductive, unreliable and even dangerousform of communication, mainly due to its secretive and insubordinatequality. From a managerial perspective, gossip is generally assumed to be aproblem. As far as many managers are concerned, gossip should be discour-aged in the organization, or, even better, it should be eliminated.

Organizational scholars have taken a more neutral stance. Kurland andPelled (2000) define organizational gossip as ‘informal and evaluative talk inan organization, usually among no more than a few individuals, aboutanother member of that organization who is not present’ (p. 429). Noon andDelbridge (1993) argue that gossip circulated in an organization context hasnot only been viewed as negative, but also as positive (see Rosnow & Fine,1976).1 Noon and Delbridge follow Gluckman (1963) who claims thatgossip serves three collective functions: i) to create group morale, establish-ing and vindicating group norms and values (see also Herskovits, 1937;March & Sevón, 1988); ii) to exert social control over newcomers and dissi-dents; and iii) to regulate conflicts with rival groups. From this perspective,organizational gossip may be regarded as organizationally beneficial. In aless strict functionalist vein it may be recognized that gossip can also help toreveal and alter existing power inequalities (Meyer Spacks, 1985) as well ashelp to release emotional tensions (Waddington, 2005). Further, it may well

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reduce uncertainty, and facilitate sensemaking and problem solving. In ourarticle, however, we will explore whether and how interorganizationalrumoured gossip may help by exposing political games that agencies play.We will try to demonstrate that once rumoured gossip has acquired the statusof official formulation it may impel (other) organizations to be more account-able and responsible.

Whether ‘true’ or ‘false’, rumoured gossip can enhance organizations’value markedly (Pixley, 2004) or make them bankrupt – witness the recentUK case of the run on the Northern Rock bank, which only stopped whenthe bank’s debts were effectively assumed by the government. Once scaledup to the organizational level – especially when its rumours have bottom-line implications – gossip becomes an acute currency in the politics oforganizations, an essential stratagem in the war by other means that so oftenconstitutes interorganizational relations between rivals.

Senior executives have a general duty of care with respect to rumoursthat suggest there is corporate wrongdoing in their organization. They haveto foresee that harm might reasonably be visited upon the organization’svalue if nothing is done to prevent or deter ethically questionable behaviourby organizational officers. Accordingly, they have to act (as ethical prac-titioners) to investigate such rumours of wrongdoing. There can be legalimplications if senior executives abuse their position in an endeavour toobstruct or manipulate information, which actions would later prove tocause detriment to the organization, something that became all too evidentin the case in question.

Formulations, glosses and gossip imply certain organizational politicsand power games. In an influential discussion, two American politicalscientists, Peter Bachrach and Morton Baratz (1970), presented the politicsof non-decision-making as the second face of power. The first face of powerconcerns the outcomes of decisive battles between different actors overspecific issues, when an A gets a B to do something that B would not other-wise do. The second face is subtler: non-decision-making occurs when actorssystematically do not attend to a phenomenon of which they have everyreason to be cognizant. For reasons of organizationally structured ‘mobiliz-ation of bias’ (Schattschneider, 1960: 71) their non-attention results in ‘non-decision-making’. The mobilization of bias is deeply embedded in allorganizations; they will have ways of formally and informally enacting thesalience of phenomena that could be constituted as within their purview, andthese will determine both what will be enacted and what it will be enactedto be – and not be. Some things will never make the political agenda as it isdefined by dominant parties; they are, either implicitly or explicitly, ruled outof bounds; hence they are not raised. To adapt Haugaard’s (2003) terms, in

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such situations existing elites do not collaborate in the reproduction of someissues as phenomena to be taken seriously. Only those issues that conformto the dominant myths, rituals and institutions of the politics that theypromulgate will be admitted. Important issues that challenge these dominantideas will not be acknowledged. Their exclusion from consideration signalsthe neglected second face of power. Politics is done and power is exercisednot just by doing things but also by not doing things.

If analysis is restricted merely to those issues which elites sanction andofficially formulate and we do not attend to those informal mechanisms forresisting these accounts – in this case the spread of a gossip – we will missthe ways in which organizational power relations seek to restrict agendas todominant mobilizations of bias (Friedrich, 1937). What is left unsaid inaccounts positioned as legitimate, official and authoritatively formulated issometimes more important than what is carefully articulated.

Case methods and analysis

A Royal Commission of Inquiry, known as the Cole Inquiry (after the nameof the Commissioner, Mr Terence Cole), was established into allegationsabout the role of certain Australian companies into what became known asthe Oil-for-Food case. The Royal Commission’s public hearings began inmid-January 2006 and continued through to the end of September that year.Transcripts of the entire proceedings, from December 2005 to September2006, are posted on an official government website [http://www.offi.gov.au/agd/WWW/unoilforfoodinquiry.nsf/Page/Transcripts]. The authors followedthe case day by day, reading and listening to the media reports and cross-checking the transcripts as they were posted. Major landmarks in theprogress of the inquiry were the cross-examinations in the first six weeks ofpublic hearings by Counsel Assisting Commissioner Cole, Mr John Agius, ofwitnesses from the AWB that revealed conduct that was highly questionable,including photographic evidence of senior executives posing with guns andsuitcases of money in the back of four-wheel drive vehicles in Iraq. Witnessesfrom the AWB frequently claimed memory loss, inability to locate diaries andnotes 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 in2006, on 6 February, the inquiry’s terms of reference were extended toinclude the activities of companies in the BHP Billiton Group and otherassociated companies. Shortly thereafter, on 16 February 2006, Com-missioner Cole invited broadcast media into the inquiry’s hearing room to

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record an invitation for anyone with information about kickbacks or theIraqi oil-for-food scandal to appear before his inquiry. In April 2006 keymembers of the government, including the Prime Minister Mr John Howard,the Foreign Minister, Mr Alexander Downer, and the Trade Minister, MrMark Vaille, were cross-examined. Of course, what was admissible evidencewas circumscribed by the terms of reference of the Inquiry, which were tightlycircumscribed.

The authors proceeded with data collection by reading the dailyreportage of the Inquiry during the course of its public hearings (the precisedates of which are posted on the government website); listening to itsdiscussion on current affairs and news media, and checking the transcriptson the website. An initial approach was to analyse the transcripts themselvesbut the sheer volume of material made this too unwieldy a process for journalarticle treatment. Instead, we resolved to address the findings, taking the factthat they were juridically constructed as a warrant of their truth value forall practical purposes. In other words, we traded off the institutional legit-imacy afforded such arenas as Royal Commissions of Inquiry and theirfindings. Our task then was to construct a narrative in which the main pointsof theoretical issue were heightened; that is, we constructed the narrative asan explicitly theoretical tale rather than as a recitation of events, unfoldings,findings, and characters. We had to suppress many aspects of the case thatwere fascinating in terms of local politics but which did not illuminate thepattern we sought to construct by weaving together the analytic concerns forthe analysis of gossip and the politics of its construction, circuitry andinterpretation. Hence, the account that follows, while true in the sense ofbeing juridically ‘certified’, is a theoretical narrative constructed from therange of accounts that circulated in and around the Cole Inquiry. We wouldwant to argue that there is considerable scope for social scientific analysisthat uses such ready-made socially constructed materials as its data. Just aswhat are socially constructed as official statistics and their interpretation maybe a rich source of social science data so too may be what are sociallyconstructed as official accounts and their interpretation.

The Oil-for-Food case

The Oil-for-Food program, which the UN sanctioned through SecurityCouncil Resolution 661, was an escrow account set up to pay for humani-tarian relief for the Iraqi people during the UN blockade of Iraq, prior to thesecond Gulf War. Trade with Iraq at this time was only legitimately and legallypossible 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 foodmarketers, of whom the most significant were the wheat marketers, deliver-ing the staple of everyday life into the region from the vast acreages of theUSA, Canada and Australia. The international market was very competitiveand was clearly not a free market, given its administration through the UNand the effects of the sanctions.

Persistent gossip in and around the UN was initiated by Canadianwheat marketers and then picked up by US wheat marketers and politicians,rumouring that from as early as 1998 the Oil-for-Food program was beingsystematically abused, and that the major miscreant was the AWB. Thegossip rumoured by the Canadians intimated that the Australians werebribing their way into a market that was proving to be inaccessible withoutthe benefit of bribes. AWB answered the gossip by saying that the claims wereunfounded and, moreover, mischievous. The Canadian and American wheatgrowers’ organizations and representatives were the prime internationalcompetitors of Australian wheat farmers, and thus self-interestedly sullyingthe reputation of the AWB. After this AWB formulation, similar reassuranceswere widely repeated by Australian government representatives. After theseofficial denials were issued, the AWB share price rose strongly.

Felicity Johnston, a British diplomat with the UN Oil-for-Foodprogram, identified that in 1999 she first heard gossip, which had begun tocirculate in the UN, claiming that the AWB was in breach of the program asa result of allegations initially raised by the Canadian Mission to the UnitedNations. In her words the AWB:

[W]ere paying, it transpires later, a transportation company to bringthe goods to the governorates within Iraq. However, my understand-ing, after the affair is over, is that this is a company that was intro-duced to them by the government of Iraq, that the rates for thetransportation were specified by the government of Iraq, that anyincreases in those rates were specified by the government of Iraq, thatin fact the whole operation was a shadow of the government of Iraq,and I think that it was rather disingenuous of them to categoricallyrespond that they were not engaged in making payments to the govern-ment of Iraq when they clearly were.

(Jones, 2006)

In 2005, the rumoured gossip was substantiated by the United NationsIndependent Inquiry Committee which had been formed at the instigation ofUS Republican wheat belt representatives to investigate allegations of Oil-for-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, releasedin October 2005, found that AWB was the biggest single source of kickbacksmade to the Iraqi government. The Volcker Inquiry found that over $300million was paid in ‘trucking fees’ to a Jordanian firm called Alia, which wasmajority owned by the Iraqi Hussein government, and did little or notrucking but acted as a conduit for bribes. As a result of the Volcker Inquiryfindings the Australian government was obliged to act; Volcker’s determi-nations could not simply be ignored for they had made an issue out of some-thing that had been treated by the AWB and the government as a non-issue.The government response was to constitute a Royal Commission of Inquirywith strictly circumscribed terms inquiring into ‘certain Australiancompanies in relation to the UN Oil-for-Food Programme’, established underthe Royal Commissions Act 1902, and known as the Cole Inquiry. The termsof reference were to inquire ‘whether decisions, actions, conduct or paymentsby Australian companies mentioned in the Final Report (“Manipulation ofthe Oil-for-Food Programme by the Iraqi Regime”) of the IndependentInquiry Committee into the United Nations Oil-for-Food Programmebreached any Federal, State or Territory law’. Notably, they did not touchon the role of government or the public service. One may be certain that thisexclusion by the government was quite deliberate; that there was any kindof enquiry was largely a result of the Volcker Report to the UN; that suchan Inquiry could not be avoided after these findings became public wasinevitable but the restriction of the terms of reference to exclude thegovernment and public service meant that there could not be any formalattribution of responsibility to these bodies.

The $300 million was paid to ensure the sale of Australian wheat inIraq. In making these payments it seems that the AWB was complicit in aparticularistic interpretation of trade regulations that constituted a ‘mockformalism’ adjusted to their understanding of what it took to do business inthe Middle East (Veiga et al., 2004). The ‘trucking fees’, although paid outof the UN escrow accounts, were claimed as tax write-offs from theAustralian Tax Office as ‘facilitation payments’. The Cole Inquiry sawgovernment Ministers and the Prime Minister (note that at the beginning ofits bribing Alia, the AWB was still a government instrumentality) carefullyarticulate under conditions of official interrogation that they were neverformally informed about the scandal and knew nothing about it. It also sawthe Cole Inquiry establish that 21 diplomatic cables had been received bygovernment officials in DFAT (Department of Foreign Affairs and Trade)alerting them to the rumoured offences. These servants of government andthe government’s Prime Minister, Foreign Minister and Minister for Tradeclaimed 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 hadreceived repeated assurances from AWB that the gossip was incorrect.

DFAT claimed not to have known formally what the AWB was allegedto have been doing. DFAT’s position, unusually for a political organization,was to represent itself as only a formal organization, as an arena in whichgossip did not circulate. Thus, the accounts presented to the Cole Inquiry bysenior Ministers proposed that DFAT was an organization in which thediplomatic reports and cables that reported the rumours, despite circulatingwithin the organization, did not become the subject of informal discussion.With respect to interpretation of the AWB’s actions, ‘the constant informal,deniable “buzz” that goes on orally between senior intelligence officials andministers or their staff’ (Kevin, 2006) was represented by senior governmentfigures as a gossip-free zone in the corridors of an environment which, it iswell documented, thrives on rumoured gossip (Watson, 2002).

It is evident from the Cole Inquiry that the government witnesses couldnot recall much of moment and that there was a superabundance of thingsthat they were not formally told. The Cole Inquiry established that many ofAWB’s senior executives were fully cognizant of the fact that they wereengaged in an arrangement that they did not wish people in positions ofauthority to know about (Jones, 2006). In an interview conducted while theCole Inquiry was still sitting, one of the witnesses called to the Inquiry, theaforementioned British Diplomat on the Oil-for-Food Program, FelicityJohnston, noted that by 2001 rumours were circulating but ‘no one wouldever go on the record’ (Jones, 2006). Only after the Volcker Inquiry did theserumours become a matter of fact, which was corroborated by the subsequentCole Inquiry. As Marr and Wilkinson (2006) report, the account of the AWBestablished in the Cole Inquiry was an almost perfect example of the politicsof non-decision-making, ‘a story defined at every stage by what was notdone’, by government, DFAT, and the AWB Board, none of whom enquiredclosely about the ‘trucking fees’.

The initial formulation made by the government was that the rumouredgossip was an underhand piece of competitive strategy. The Prime Ministerwas to say, ‘Attacking the behaviour of one’s trade competitors in the inter-national wheat trade is fairly common’ (Marr & Wilkinson, 2006: 11). Thus,the gossip was not taken seriously as an allegation whose claim was to beinvestigated. Instead, the overriding account provided by senior governmentmembers was couched in terms of competitive strategy shaping competitoraccounts. The AWB’s officially formulated denial of the gossip then becamethe basis for a further refusal to acknowledge the contents of the communi-cations – the 21 cables – that continued to be sent to DFAT. Although thesearrived 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, operatingas he was on a ‘need not to know’ basis. The Minister, a member for thefarmer’s party – the National Party – seemed sympathetic to the AWB pointof view that the key issue was the continuing successful sale of Australianwheat to the Iraq government and that no other considerations were moreimportant.

The Australian government, despite what circulated in the UN andCanberra, could simply deny that they were ever formally advised of thegossip that was transmitted in the 21 cables that advised DFAT of UNsuspicions. Although these cables had been received it was claimed that theircontents were never formally communicated to senior government members.The AWB had, at the outset, formally denied the gossip and that seemed tobe the end of the matter. Indeed, it might well have been, had it not been forthe American persistence that saw the Volcker Inquiry instituted. Therumoured gossip had now moved into a formal circuit of power that neitherthe Australian government nor its bureaucracy could deny or control.

When government members were eventually confronted in the witnessbox at the Cole Inquiry with damning details of the contents of the cablecommunications, recollections simply failed. For instance, the ForeignMinister, Mr Alexander Downer, said more than 20 times that he had ‘nospecific recollection’ of cables, key conversations or events surrounding thescandal. He could not ‘specifically recall’ seeing the cables that were sent tohis office warning that AWB might have been paying kickbacks to Hussein’sregime in violation of UN sanctions. As far as he could recollect he was neverformally advised of anything to do with the unfolding scandal. Cables ande-mails may have been received but were never brought to his formal atten-tion. By not attending to these data, a concerted effort to ensure that theyremained non-issues for non-decision-making can be seen.

Every attempt was made to ensure that the gossip was not registeredwithin governmental circuits of power. For as long as it floated free, as asignifier that formal actor networks were reluctant to enrol, translate andliterally ‘domesticate’ (Callon, 1986), it could continue to be framed in termsof ‘competitive strategy’. Framed thus, the organizational response wasdenial on both the part of the AWB and all those Australian governmentagencies that dealt with the AWB. The rumoured gossip that circulated inthose cables, faxes and e-mails that was received but never attended to,because it was never formally acknowledged, could be denied the status ofan issue. It was, literally, constructed as a non-issue. However, once thegossip moved into legal circuits of power and outside the arena of govern-mental administrative power, its precise status as issue or non-issue came intocentral 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 wasthe transformation from gossip as a rumoured gloss (on a formal formulationof denial) to a formal formulation that stands as an allegation which thenbecame the subject of legitimate determination. In the next section we shalldeconstruct the route from the Canadian Wheat Marketers gossip to theRoyal Commission.

Discussion: Tracing the case and attributing power andresponsibility

It is clear where the rumour of AWB’s malfeasance began: in gossip aboutthe AWB by Canadian Wheat Marketers in the late 1990s. The gossip wasnot legitimated by any agency at this stage because it was not officiallyformulated; it remained a gloss on the formal accounts that the AWBprovided, that they were winning sales through efficient marketing. From theCanadian Wheat Marketers the rumoured gossip travelled in two directions.First, it crossed the Pacific to Australia, where it was denied by the AWB andlater dismissed by the Prime Minister as ‘competitive strategy’. Second, thegossip started to circulate in New York in the UN, where it was picked upby Australian representatives who raised the matter as an issue with DFAT,from whom they sought clarification; this came in the form of securingcounter-factual assurances from the AWB. On the basis of the initial denialof responsibility the government’s policy, transmitted to DFAT, was to ignorefurther claims. The gossiped rumours of the Canadian Wheat Marketerswere thus translated, variously, by the government as ‘competitive strategy’,by DFAT as questions put to the AWB which translated into ‘denial’, andwhich, on that basis, became the stock position of the Australian govern-ment and its agencies – that they had tested the gossip by seeking clarificationfrom 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 ofthe UN building and into the United States, where US Wheat Marketers madesure that their political representatives heard about it. They, in turn, pressuredthe United Nations to investigate the Oil-for-Food program, with the resultthat the UN established the Volcker Inquiry, which identified systematiccorruption of the Oil-for-Food program and implicated the AWB. With theinstitution of the Volcker Inquiry the gossip changed status from being aninformal gloss to being officially formulated and legitimated.

According to Australian government accounts, when the claims wereinitially 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 alle-gation was tested and its legitimacy established by the Volcker Inquiry. TheAustralian government could exercise legitimate authority in its sovereignspace and control the rumoured gossip by denying it or labelling it as merelya ‘competitive strategy’. But it could not control the translation of the gossipas claims raised in the UN and investigated by Volcker. The approach of notattending to the allegations no longer had any credibility once the VolckerInquiry addressed and confirmed them. The non-issue had become an issuebecause of the actions of organizational agencies extraneous to theAustralian government and the AWB.

After Volcker reported to the UN, the Australian government estab-lishment of the Cole Inquiry made what had been a non-issue a domesticissue. At this point the whole farrago of gossip, rumour, denial claims ofcompetitive strategy, allegations and findings became subject to juridicaldetermination under the terms of reference established for the Commission,which pointedly did not entail inquiry into the government’s role.2 Thatremained a non-issue. While the gossip was undoubtedly a mobilization ofbias on the part of rivals excluded from the grains contracts so was theresponse of the Australian government in not allowing enactment of the 21cables that Cole identified. What was not done was the making of an issueout 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 findings was irrevocably political. Thestrategies used by the key Australian players – denial by the AWB andsystematic non-attention by the Australian government – were an integralpart of a wholly political process, in organizational terms. It is, indeed, diffi-cult to separate gossip from allegation, strategy and determination becauseonce the gossip started to flow it was irrevocably political. Hence, we haveidentified a phenomenon neglected in the organization literature – the politi-cal role of interorganizational gossip in spreading rumoured gossip – fact-based – and making issues out of what other organizations constitute asnon-issues.

One of the major mechanisms for the subtle exercise of power in andamong organizations is enacted through the formal politics of official recog-nition; 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 responsi-bility. This was the key move made by the Australian government in the AWBaffair, demonstrating a classic politics of non-decision-making.

One of the ways in which what Brunsson (1994) terms ‘organizationalhypocrisy’ is produced consists of organizations categorically denying gossip

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and rumours, in terms of the public record. Especially where multiple glossesof a formulation circulate, and where there is a conspicuous differencebetween the facts of the matter that are promulgated in the differentaccounts, there is ample opportunity for the politics of non-decision-making.In fact, it is precisely in such circumstances that, organizationally, we aremost likely to find such politics. At the same time, organizational others haveno recourse other than to unofficial glosses by virtue of the fact that anexisting account has been constructed as formal and thus legitimate. Never-theless, to treat competing accounts as non-issues is, as we have seen, adangerous and unstable organizational politics.

What is critical is if the rumoured gossip becomes an allegation.Rumoured gossip can circulate anywhere from anyone; allegations are muchmore explicit. As a legal term, an allegation is an assertion, especially relatingto wrongdoing or misconduct on somebody’s part, which has yet to beproved or supported by evidence. While gossip might circulate in a liminalspace, an allegation is in the public sphere and can be contested. Rumouredgossip becomes allegation if it is denied by the parties being rumoured aboutand then they are repeated after that denial in a juridical context. Goodmanagement should seek to ensure that its affairs do not become the provinceof legal determination because once they do they are outside of the controlof the managers. That is why the strategy of non-decision-making is risky.The strategy creates a non-issue and, unfortunately for those organizationsthat have the hubris to imagine that their mobilization of bias can maintainthe present equilibrium, they often spiral out of control, as competingaccounts circulate. Strategically, ignoring them may seem like a good idea,but accounts/glosses travel, and sometimes if they have powerful sponsorsthey will end up in a juridical arena. That is where the end game begins: thequestionability of rumoured gossip of what is taken to be a rival account ofmatters of fact will be tested. Organizationally, the officially formulatedaccounts can only maintain their legitimacy if the entity that issued themdeems itself slandered or libelled; the party that considers its truth claims tohave 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 find actors framing consent to an interpretativeworld-view within a particular world-view or episteme. As we have soughtto argue in this article, such work also goes on every day in far more mundaneparlance – in rumoured gossip, counter-claims, denials, allegations, inquiry

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findings and legally binding determinations. In Lukes’s (2005) terms, whilepower is always aligned with responsibility, it is only at the latter point – oflegally binding determination – that we can be unequivocal about their attri-bution. However, the whole progression, from organizational gossiponwards, is a political game seeking to build a specific locally grounded ‘truthclaim’. It is in this way that the rules of the game which decide what is legit-imate or illegitimate are interpreted. As we have tried to show, the wholeprocess is one of power relations moving and flowing through differentcircuits of formulation and gloss, seeking to fix legitimacy. What is con-stituted as formulationally legitimate in this case creates both causal powersand attributions of responsibility. The strategic movement from glossthrough formulation and into that space in which allegations can becomedeterminations is where de facto legitimacy is created.

Some fundamental patterns are revealed by the analysis. For organiz-ations that spread and sponsor gossip about competitors the target is usuallyto unveil and oftentimes also undermine the actions of these organizations.For the organization that is being unveiled and undermined, the options areseveral. The rumoured gossip can be denied. It may be conceded in part butquestioned in interpretation. Or a clean breast can be made. For the organiz-ation being gossiped about, as long as the gossip is not on the record it cannotbe attributable formally, organizationally. Even as the gossip circulates andinforms opinion, it can always be denied in terms of what is on the formalrecord. Unless and until it is formally registered as a specific allegation thetruth-claims constituted in rumoured gossip can be denied. Thus, as long asthe gossip never routes through any circuits of power that can authenticatetheir provenance, they can be rebuffed and constituted as non-issues.

For any organization about which rumoured gossip circulates, after thefirst denial and with the same management team, there will often be circum-stances in which it is irrational to do anything other than to continuedenying, as Benoit (1995) suggests. The circumstances in which this is not awise strategy arise when there is the possibility that one’s officially formu-lated accounts may have to be defended in a court of law against what isrumoured, as we have argued. Consequently, any organization’s top manage-ment team has to act in the here-and-now in ways that they know might beseen as defensive and guilty strategies in some future context. The probableimpact of the circulation, let alone the verification, of rumours on the shareprice is hardly likely to be in the interests of shareholders.

Sillince (2007) suggests that the important questions to ask of anyunfolding story are when, where, who, and why? In the AWB case, the crucialwhen occurred with the deliberations of the Volcker Inquiry; the criticalwhere was the fact that it took place under the authority of the UN, while

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the significant who’s included senior and allied diplomats and governmentministers and officials, while the overall plot device – the why – had to dowith the struggle to win the lucrative Iraqi grains market. Thus, the politi-cal stakes were very high and the characters enrolled in the rumoured gossipextremely powerful and senior.

Conclusion

In conclusion, this article aimed to theorize about a possible circuitry oforganizational gossip as an element in interorganizational power andpolitics. First, an organization A circulates a claim, X, about organization Bas gossip which has no formal or official status. Nonetheless, it circulatesand is widely distributed. Organization B, on hearing the gossip, raises anofficially formulated account about the actions which gossip X addresses.Thus, organization B simultaneously denies the substance of X whileacknowledging its circulation; thus it enacts the gossiped action X to a formalstatus that it previously did not have. The gossip X, which previously circu-lated as a glossed issue, has now been constituted as a formulated non-issueby its denial. When called to account about the issues raised in gossip aboutX, organization B merely repeats its formulation that X is a non-issue, to allwho ask for clarification. Thus, organization B never formally accepts thatthe gossiped issue X has any credence at all. That it is formulated as a non-issue becomes its chosen obligatory passage point.

As we have seen in the case analysis, rumoured gossip may then enterinto 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 mightoften rest in limbo, unless there is the irruption of some other agency into thearena that these politics have constituted, such as investigative journalists,juridical bodies, or other agencies that do not simply accept officially formu-lated accounts. When such agencies are able to raise issues in a court of somekind, either the court of public opinion or one legally constituted as such, thenon-issue is translated once more into an issue – in so far as the attributionof responsibility can be posited. Even in sophisticated organizational powergames, power always comes down to matters of responsibility, as Lukes(2005) suggests.

The whole process we have analysed was one of power relationsmoving and flowing through different circuits of formulation and gloss.Basically, organizational gossip plays a key role in the production of inter-organizational power dynamics, an insight previously neglected.

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An important qualification to Clegg’s (1989) original formulation ofthe circuits of power model is in order. It is far too static – even as it seeksto represent a play of flows. The arena of social relations that kick-starts anyepisodic power event never starts from any fixed point. Some actors in thearena are constantly seeking to fix social relations (such as the AWB securingthe wheat market for Australian grain growers), but there are always otherforces working to destabilize and unfix these relations (such as the Canadiangrain growers). And the episodic power relations that they initiate may wellbe wholly outside the formally stabilized relations in which power has beenvested. Indeed, in as much as these relations are fixed a key strategy forunfixing them may well be the strategy of ‘white-anting’ by rumour monger-ing – nibbling at the foundations on which the fixity depends.

The starting point of any power relation, let alone the concept itself,is essentially contested in practice. More often than not, in any stabilizedfield of interorganizational relations, contestation of existing power relationswill likely be organizationally outflanked by the structuration of theserelations in their immutability. However, in arenas such as Iraq underSaddam after the first Gulf War, the field was hardly stabilized as the statehad established neither rational legal authority nor efficient markets. In theabsence of these, interorganizational relations were more accountable in theirrepresentation than their reality. For as long as these relations could be repre-sented as in accord with Resolution 661 the reality of their positioning hardlymattered. And for as long as the bribes silenced the local and corrupt eliteswho were enrolled in the wheat sales, and there was no other circuit thanthe corrupted market through which trade flowed, the actions of thoseexcluded from the arena by the acts that had stabilized the existing circuitsof power were of no account. And that might have been the end of the storyhad not the whole business been conducted under the auspices of the UN,who opened up another arena in which gossip could be vented andcountervailing interests enrolled. Thus, any model of circuits of power muststart from the realization that any given arena – that which Clegg (1989)represents as stabilized by the episodic power circuit – necessarily intersectswith many other episodic circuits in which what is stable and taken-for-granted in one circuit may well be deconstructed and destroyed. Hence, the1989 model was too static – there is no fixed starting point for episodicpower – these are always points in a contextually shifting here and nowconstantly redefined by prospective and retrospective sensemaking (Schutz,1967; Weick, 1995). Moreover, episodes of power can start wholly outsidethe formally established relations between organizations, and episodiccircuits tend to intersect. However much an organization may assume thatit has stabilized the circuits of power flowing through a specific arena, that

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arena is always capable of being reconfigured by other circuits, other actors– and gossip plays a key role in these relations.

Politically astute managers should be well aware of these things andhave communication strategies in place that stabilize messages across allpotential episodic circuits that might influence their actions, rather than gofor quick wins where they can. They need to be well aware of gossip’s roleas a political strategy, for, as Lukes (2005) claims, the exercise of poweralways entails matters of responsibility as a choice is made to do one thingand not another thing. They would do well to recall that, in antiquity, asSeneca (1999) remarked (and as Butler [2005] reiterated for modernity),responsibility implies an essentially social and future perfect oriented callingto account of how what is done and seemingly past will be reconciled withwhat has not yet, but very well might be, said in the future. To be respon-sible means, as Messner (2007) suggests, acting to frame the limits of whatis possible and impossible. Choices are always potentially consequentialwhere there are observers and commentators on the choices that organiz-ations make. Given these pointers, neither the AWB nor the Australiangovernment proved themselves to be especially sophisticated or responsiblemanagers. The former lost their case while the latter were later to lose office.Glosses trumped formulations once they entered into formal circuits ofpower. Interorganizational gossip is an essential tool for the politics of resist-ance to formally constituted power relations.

Acknowledgement

The authors would like to thank all their colleagues in the several places atwhich they have presented these ideas for their comments on earlier drafts. Theauthors 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 andAngus Young, as well as the handling editor and three anonymous reviewers atHuman Relations.

Notes

1 Notably, negative gossip is often seen as a specifically feminine activity while gossipas a positive discourse seems more masculine in its projections (see Kanter, 1977;Sotorin & Gottfried, 1999).

2 The findings of the inquiry were tabled on 27 November 2006 in the House ofRepresentatives in Canberra and it was recommended that legal authorities shouldconsider 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 company’s internalcorporate culture. ‘The question posed within AWB was: “What must be done tomaintain sales to Iraq”. The answer given was: “Do whatever is necessary to retainthe trade”. No one asked, “What is the right thing to do?”’ Commissioner Cole saidAWB disguised the kickbacks to the Iraqi Regime and sought to hide them from theFederal Government and the United Nations. ‘Necessarily one asks, “Why?” Theanswer is a closed culture of superiority and impregnability, of dominance and self-importance’ (Davis, 2006: 1). The Report recommended that the government shouldin the future seek to enforce UN sanctions more robustly and that a special enforce-ment branch investigate breaches, with tougher penalties established for companiesengaged in sanctions busting and misleading the government on export permits.DFAT was criticized because its officers failed to follow up allegations that AWBwas breaching UN sanctions. In fact, DFAT had no mechanisms for testing theveracity of what was being gossiped about. All it did was to seek assurance fromthe 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 factorysystem.Ad is currently an Associate Professor at the Faculty of Economicsand Business Administration,Maastricht University.His academic work hasfocused 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 inorganizations, such as organizational gossip, cynicism and informalization.This has resulted, amongst others, in The civilized organization: Norbert Eliasand the future of organization studies (Amsterdam/Philadelphia, PA:Benjamins, 2002, co-edited with W.Mastenbroek,T.Newton and D.Smith).He has also published fiction.[E-mail: [email protected]]

Stewart R. Clegg completed a first degree at the University of Aston(1971) and a doctorate at Bradford University (1974). Stewart is currentlya Professor at the University of Technology,Sydney, and Director of ICANResearch (Innovative Collaborations, Alliances and Networks Research),a Key University Research Centre. He also holds Chairs at AstonUniversity, and is a Visiting Professor at Maastricht University, the VrijeUniversiteit, Amsterdam, and EM-Lyon, France. He also enjoys a VisitingAppointment at Copenhagen Business School, Denmark. He haspublished extensively in many journals and has contributed a largenumber of books to the literature, including the award-winning Handbookof organization studies (SAGE, 2nd edn 2006, co-edited with C. Hardy, W.Nord and T. Lawrence). His most recent books are Managing and organiz-ations: An introduction to theory and practice (SAGE, 2005, co-authored withM. Kornberger and T. Pitsis) and Power and organizations (SAGE, 2006,co-authored with D. Courpasson and N. Phillips).[E-mail: [email protected]]

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