The appearance thereof

A good conflict of interest policy should seek to eliminate not only actual conflicts but also the appearance thereof.

This is what the US Congress is trying to do by banning members from trading individual stocks. It is not enough to review a trade after it has been made because, in many cases, the trade was made after a member received information from a classified briefing.

Take a look at your conflict policies, gift policies, even your anti-corruption policies. Are they filled with detailed prescriptions about who-can-receive-what-from-whom-and-under-what-amount? If so, it could be a sign that the activities you are trying to regulate might simply need to be prohibited.

A children’s book on corruption

It is rare for the topic of corruption to put a smile on anyone’s face. However, I could not help smiling as I listened to my colleague Patrick Henz’s new audiobook for children: Pepe, the Red Race Car.

In this short story, we follow the adventures of Pepe as he competes in various races around the world. Pepe, who is fair and honest, must decide what to do when he notices a competitor breaking the rules with the help of a race official.

There are many good lessons in this book, from living by your values to speaking up when something is wrong. But if I had to choose one favorite, it would be this: the pleasure one hopes to derive out of winning evaporates when the win results from cheating.

My Top 5 Ethics and Compliance Influencers for 2020

Every workday, I aim to write a post on this blog.

My process is simple. I read, then I write. I read about current events and I read what others have written on ethics and compliance.

The world’s news often offers a good idea for a post. When that fails, I can rely on other writers for inspiration, people who think deeply about what it means to be human, to fail and to strive always to do better.

This post will highlight 4 individuals and one organization who most inspired my writing this year. Of course, there are many others, too many to list here. But these 5 were with me all year as we all tried to navigate an uncomfortable world.

I encourage you to follow them*.

Richard Bistrong. Before becoming an advisor on corruption risks, Richard was an international sales executive. At some point along the way, he stepped on the proverbial slippery slope and was eventually sentenced to federal prison for corruption. Richard doesn’t blame anyone for the choices he made. By sharing his story (in person and online), Richard helps others identify and avoid risky situations. He teaches by being transparent and vulnerable.

Carsten Tams. Carsten doesn’t blog just anywhere; his posts are featured on two separate blogs of Forbes Magazine. After over 15 years in various roles linked to ethics and culture in a global media company, Carsten now helps clients solve organizational challenges by using the latest findings of behavioral science. He reads broadly, thinks deeply and write clearly.

The Ethics & Compliance Initiative. This organization is dedicated to helping its members create and sustain high-quality ethics and compliance programs**. It does so by providing research that doesn’t aim to sell you a product or a service, but rather helps you understand what truly drives behavior in an organization. With its daily email briefings, monthly stats and annual surveys, the ECI helps me bring value to both my organization and my readers.

Ricardo Pellafone. Ricardo changed how I look at compliance training. I now understand the difference between risk-based training – the kind that’s great for lawyers – and task-based training – the kind that’s perfect for employees trying their darn best to do their job compliantly without having to spend eons learning about compliance. Ricardo and his team at Broadcat write sharp, no-nonsense posts on their blog, often spiked with funny GIFs and videos.

Seth Godin. Seth is not an E&C professional. He is a writer and a marketer. A marketer is not the same as an advertiser; advertisers try to make you buy stuff. Seth tries to make you see the world as it is and urges you to make a difference. He does so with short, daily blog posts (he hasn’t missed a day in over 10 years). Seth often write about the importance of trust in business, which often inspires my writing.

* As with all posts, my views are not expressed on behalf of or at the request of my employer.

** Full disclosure: I am a board member of this organization.

What’s it worth to you?

When should we act to prevent corrupt behavior in our company?

When an employee raises a concern? When an internal auditor includes an observation in a report? When outside advisors recommend that you strengthen your internal controls?

The makers of Jim Bean Bourbon chose to wait until they were fined $8.2 million by the U.S. Securities and Exchange Commission and $19.5 million by the Department of Justice.

Somewhere in your company, someone is asking you to spend money right now to improve your controls and your culture. And I bet they are not asking for millions.

Just in time

Imagine a world where we don’t put stop signs or traffic lights at dangerous intersections.

Instead, we provide training to all students entering high school, telling them where the dangerous intersections are, hoping they will remember when they first take the wheel a few years later.

Sounds ridiculous?

Yet, many companies train their new employees on antitrust or corruption risks months or years before these employees will attend a trade show or interact with a government customers. Wouldn’t it be better for the training to be provided just before every trade show or customer meeting – as if they were approaching a dangerous intersection?

Transparency or corruption

I have written before about the corruption risks related to major sporting events like The Olympic Games and The World Cup. Whenever billions of dollars converge on a single event, corruption risks are high.

There is an unusual event these days that is also attracting billions of dollars: the pandemic. Governments all over the world are spending billions every month trying to contain the virus and finding a vaccine. One way to mitigate related corruption risks is to clearly see how these billions are spent.

To that end, the US Congress passed a law earlier this year creating a database that was intended to track all COVID-related monies spent by the US government and to protect taxpayers. However, the current administration found a loophole and awarded $6B of vaccine contracts to a single company without taxpayer protections.

The US government is indicting more companies than ever under the “books and records” provisions of the FCPA (and for good reasons). So why is the same government not following its own advice and being transparent about how it is spending public funds?

COVID and corruption

Journalists and lawmakers are starting to investigate how certain public contracts related to COVID-19 have been awarded.

We should expect many more investigations of this kind all over the world. When billions of dollars converge on one event, whether it be the Olympics or a pandemic, there is bound to be corruption, self-dealing, and other improprieties.

With the Olympics or the World Cup, we understand the importance of augmenting corruption controls years before the event takes place. The minute the host city is announced, we can start reinforcing the compliance program and the ethical culture of our local operations before the first bid is due. With COVID-19, governments have not had time to do this. They’ve all had to rely on ordinary controls.

But here’s one thing we can prepare for: the reopening. Once the machine revs up again, and millions of customers are urging millions of companies to release goods that depend on millions of suppliers, the pressure will be on. And with pressure comes not only wrongdoing but a diminished capacity to fight wrongdoing.

On the other side of the reopening coin is the need to “ease” compliance. My friend Richard Bistrong wrote an excellent piece about it on the FCPA Blog, which I recommend you read with this one as an interesting balancing act.

Russia, sports and trust

The World Anti-Doping Agency just banned Russia from all international sporting events (including the Olympics) for the next 4 years.

It’s a severe sanction but perhaps justified when considering that Russia has been stripped of more than 40 Olympic medals since 2002 because of doping. This is more than any other country, 4 times more than runner-up (Ukraine) and about a third of all medals stripped for doping globally.

When considering disciplinary actions at work, I tell management to ask themselves this question: what is the smallest sanction you can impose that is likely to prevent a recurrence? Sometimes, a good discussion is all that’s necessary. At other times, termination is in order. In most cases, we settle for something in between (warning, suspension, transfer, bonus-cut, demotion, etc.).

When it comes to termination, the other question to ask is: did this employee commit a breach of performance or a breach of trust? The first one is easier to forgive than the second one. If we can’t trust the employee anymore, how can we keep them around?

Over the next 4 years, Russia should focus on regaining the sporting world’s trust.


Within 10 years, we will all be reading about corruption scandals in Italy.

How do we know this? The International Olympic Committee just selected the country to host the 2026 winter Olympics.

Billions (trillions?) of euros will converge on the cities of Milan and Cortina d’Ampezzo in the next few years. Corrupt business people and politicians have already laid their plans.

So if your organization has a presence in Italy, the time to start building your defenses is now. Review your policies, create a multi-year training plan, implement new controls and schedule audits. More importantly, review all your processes and make sure they create the right culture.

Olympic Games and corruption go hand-in-hand. You can choose not to be part of it.