In January 2009, the financial services and publishing giant, announced the creation of ombuds office to address concerns about transparency and potential conflicts of interest in the rating process as well as analytical and governance processes. The move was promised by S&P's President Deven Sharma in her testimony to Congress when the company found itself accused of ethical lapses that contributed to the current credit market crisis. The decision by S&P also reflected a trend in the industry to create ombuds programs, which were already in place at Alliance Bernstein, American Express, The Hartford, Putnam, Royal Bank of Canada, ScotiaBank, and TD Bank Financial Group.

S&P's choice of Ray J. Groves to head the new ombuds office was unusual. When prominent organizations decide to hire their first ombuds, they often choose a seasoned ombuds familiar with the standards of practice. For example, when Alliance Bernstein hired its first ombuds, it selected Jan Schoenauer, who had 15 years of ombuds experience and was the former president of IOA. When the United Nations chose a director for its revamped Ombudsman Office, it tapped Johnston Barkat, an ADR expert and ombuds for Pace University. Groves, on the other hand, was the former chairman and CEO of Ernst & Young and had no ADR or ombuds experience. Moreover, there was no public search for the position so no practicing ombuds were even considered.

S&P's new ombuds program was widely covered in the financial press and the company took out advertisements in the NY Times, Wall Street Journal, and Washington Post. Presumably, S&P's 10,000 employees and thousands of other external constituents learned about the program. Most corporate Ombuds programs that serve internal and external constituents handled hundreds of cases annually. It would be expected, therefore, that S&P's ombuds office would handle at least a couple hundred cases in its first year.

Surprisingly, the first annual report from Groves did not address the fundamental issue of usage. The report does not provide the total number of cases handled in 2009, but says only that 85% were from external sources; 85% were from the U.S.; 50% concerned S&P's ratings; and only 12.5% requested anonymity. The data is significant to no less than 2.5%. It is therefore mathematically possible that the program handled as few as 40 cases. This raises at least two questions: Why didn't the S&P Ombuds office have more cases? or, if it did, Why didn't it report the number of cases? Perhaps the S&P ombuds program is perceived as mere window dressing.

More at: The Ombuds Blog.