Editors

Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

Management can own honesty or deceit. So pick one

At Fresenius Medical Care, according to a recent post on the FCPA Blog, management owned the graft and senior executives directed the bribery and the global cover up. The failures were both wide and deep, where “legal, compliance, and internal audit functions failed to detect and prevent the bribery,” the company said in an SEC filing.

That’s a description of poor cross-functional collaboration. Ron Carucci wrote about that topic in the February 2019 edition of the Harvard Business Review.  His article, 4 Ways Lying Becomes the Norm at a Company, describes how weak cross-functional collaboration leads an “an organization [to be] 5.82 times more likely to have people withhold or distort information.”

For example, at Fresenius, think about all the functions which either knew or looked the other way when, as reported by the FCPA Blog, “top executives in Germany began receiving reports in 2009 that a general manager in Saudi Arabia was submitting phony accounts for marketing and travel expenditures.”

The challenges of functional cooperation are magnified during what I call “worst workplace moments,” when someone, thinly supervised, operating remotely, jet-lagged and sleep derived, is faced with an ethical decision, and that decision is going to get made in a nano second.

As leaders, do you know what will trigger those decisions and inspire outcomes that are going to guard everyone’s welfare? Have you considered what is going to guide your workforce in that decision-making process when someone might feel in the cross-hairs of competing corporate objectives, facing unrelenting pressures to both succeed and comply? Those are the moments where ethics, integrity and compliance get measured: in the worst of times and environments, far away from home, and not comfortably nestled at HQ with plenty of support personnel around.

Those moments are not static either. I recently had the pleasure of hearing Maarten Hoekstra, senior expert, compliance development, at ABN AMRO, who shared at an SCCE event in Berlin how those “worst of times” moments can occur at multiple points during the end-to-end client interaction lifecycle, and how those risks differ, based on the role of each individual. 

That was true at Fresenius. The company violated the FCPA across Europe, Africa, Asia and the Middle East. Lots of different employees and third parties were involved. Are executives aware of those risk-points throughout the client and/or sales lifecycle. Are the executives avoiding the perils of passive leadership, where those in the field might think that a corporate mandate of “hit your target but avoid risk” is left for them to untangle at the front-lines?

Yes, conflicting objectives are a natural, almost inherent part of organizational growth. But delegating that tension to those who work in the middle of complex and unforgiving markets to figure out “what management really wants” usually becomes a self-inflicted wound for the organization.

Eric Young, the CCO at BNP Paribas, said in an inspiring interview with Reuters that BNP Paribas puts front-line business in charge of conduct because behavior is an “evolving frontier.” When it comes to addressing conduct and culture, Young said, BNP created a program where conduct that’s often associated with the second-line compliance department is instead owned by the first-line business.

BNP has built in “toll gates” that serve as “check points that the business has to go through when considering various stages of a deal or transaction,” Young said. The criteria for passing from one toll gate to the next isn’t financial performance but is “whether the customer’s interests are being served, and if not, what needs to be done to ensure that those interests are being protected.”

BNP has initiated a program of “chief conduct and control officers,” funded by the business units, who “walk the different parts of the business because they are either ex-traders, ex-sales people, and so they know an issue when they see or hear one.” They have the discretion to hit the pause button and ask questions if “something just doesn’t sound right.”

For BNP, I think embedding conduct and compliance into the business dramatically reduces the risks of competing objectives. Those teams are looking at risks from both a compliance and commercial perspective. Instead of traditional control from above, the embedded conduct and culture ambassadors can both observe and question situations where day-to-day business objectives become overly complex and support is needed.

At Fresenius, management owned the graft. Perhaps we can learn from the BNP experience to take a non-traditional approach to compliance, where management is allowed to own the solution.

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Richard Bistrong, pictured above, is a contributing editor of the FCPA Blog and CEO of Front-Line Anti-Bribery LLCIn 2010 he pleaded guilty to a conspiracy to violate the FCPA and served fourteen and a half months at a U.S. federal prison camp. He was named to Compliance Week’s list of Top Minds in 2017 and was one of Ethisphere’s 100 Most Influential in Business Ethics in 2015. He was named by Thomson Reuters in 2018 as a Top 50 Social Influencer in Risk, Compliance and RegTech.

His award winning compliance training video, Behind the Bribe, produced in cooperation with Mastercard, was released in 2017. To request a demo of the full eleven-minute video or a licensing fee schedule, please click here.

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