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Mike Scher: Is it time for compliance officers to enforce company core values?

Much should be written soon about the suicide note from Ashish Awasthi: “I am going to commit suicide because I can’t meet my company’s sales target and my company is pressuring me.”

Mr. Awasthi, a 27-year-old family man at Abbott Laboratories in India was a “top performer in 2015,” according to the company spokesman.

The New York Times front page report on its six-month investigation describes potentially illegal and unethical sales practices that led to his death. Many other Abbott India sales representatives felt the same distress. His fellow sales representatives walked off the job in protest.

The company has not responded yet to the New York Times investigation. It is entitled to due process and the presumption of innocence concerning alleged legal violations.

His widow says: “He told me the company is pressuring me…I said change jobs. He said: How will I get another one?”

Was the company unaware of the pressures on its good employees and their families? Didn’t Abbott’s values obligate it to know and think about the pressures?

It’s yet another compliance scandal and a tragedy. But how could it happen in 2016?

Abbott, a leader in the healthcare industry, generates 70 percent of its revenue outside of the United States. What happened back at its headquarters, in the C-suite, in the compliance program, at the board?

The compliance staff reportedly received detailed information from an Abbott manager about possible illegal and unethical sales practices. He emailed notices to top management. He was harassed and then fired. It’s a well-known story in the compliance community. The ethical employee complains and is fired.

What has changed is Compliance 2.0 — the new normal for business organizations. It’s a management tool created by compliance officers from the healthcare sector. It works better for the employee, the company, and the public. What happened to Compliance 2.0 at Abbott? How was it implemented?

In the compliance community, we must not be distracted by obvious illegal sales practices. The New York Times report describes thinly disguised “heath camps” for the public, (ironically part of the company’s social responsibility program) but where sales representatives “diagnosed” illness to get doctors to prescribe Abbott drugs, and kickbacks disguised as discounts to national hospitals.

We need, in my opinion, to ask deeper questions. We need to get beyond the laws and the mind-set of criminal prosecution. We need to ask questions that go to the heart and soul of the tragedy. Why did the company apparently treat its sales force so awfully?

Whether or not it was illegal, Mr. Awashti and other sales representatives suffered terribly. As the sales force was squeezed, maybe it wasn’t illegal. But it was awful.

It used to be said that the FCPA prosecutions would never stop bribery. But that is well underway with institutional changes at the DOJ, especially with the addition of Hui Chen, the DOJ in-house expert on compliance programs.

Today there is little traction for the idea that companies can and should implement Compliance 2.0 to stop lawful but awful conduct as they stop criminal misconduct. That is, they should invest board time and compliance program resources in stopping awful things that violate the company’s core values.

In my recent FCPA Blog post I suggested how to resolve lawful but awful sales force decisions in the C-suite and by compliance officers.

Applying that post to Abbott:

  • Did the chief compliance officer in headquarters know about the extreme pressures applied to its  sales force in India?
  • Did the compliance officers lead a debate about sales pressures measured against the company’s core values?
  • Did they take core values debate to the board for a decision?

Company core values do not enforce themselves. They need tending to and testing in the real world. The need an institutional champion and a structure.

What makes something awful? (It can’t be the personal values, political or religious, of the compliance staff.) The definition of awful must come from the board.

Who interprets the core values? I suggest it is the compliance officers who are the subject matter experts for board codes of conduct.

And how are tough calls made? They should go to the board with full input from all sides, creating checks and balances and precedents for the next time.

I hope these suggestions can be debated.

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Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He’ll be a speaker at the FCPA Blog NYC Conference 2016.

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1 Comment

  1. Great article Mike. Avoiding "awful" should be the Board's #1 priority, but it's not in all but a handful of public companies. Call it compliance 2.0, culture, core values, high integrity or trust- they are not "owned" by any silo. Change requires a holistic approach that flows down from the top and touches every functional area in the organization.


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