Al Capone and cover-ups

The American gangster Al Capone was convicted of income tax evasion today in 1931.

One could say that it wasn’t his original crimes that put him behind bars but his attempt to cover them up.

Many employees follow this pattern. They break a rule and try to get away with it by breaking another. That cover-up usually gets them terminated.

An interesting difference between Capone and our employees (there are many, of course) is in the comparative seriousness of the original violation and of the cover-up. For Capone, it was almost comical that he was sentenced to 11 years for tax evasion rather than for life for corruption, racketeering and murder. For our employees, it is often sad that they get terminated for covering up a minor conflict of interest or mistake, one they could have easily survived had they simply admitted to it.

Our policies, training and communications should aim not only to prevent mistakes and violations but also to prevent cover-ups. Cover-ups only make things worse.

Unless you are Capone.

What’s your story?

As an ethics & compliance professional, what if your day was live-streamed for all employees to see?

What if they could see you writing multiple drafts of a new conflict of interest policy, and see you push for its adoption, and see you upload it to the website?

What if they could observe the countless hours that go into creating a training module to educate the workforce on preventing corruption – writing the script, selecting the actors, verifying the translations?

What if they could listen in during your meetings with the internal audit department as you scope audits to insure that antitrust controls are effective?

What if they could see the long hours you spend reviewing thousands of emails as you try to gather facts following an anonymous complaint?

What if they could hear the debates of the disciplinary committee to ensure that everyone is treated fairly and consistently?

In that hypothetical world, assuming employee confidentiality and privacy could be protected, I believe that the corporate culture would improve. This level of transparency would foster trust.

In our real world, we can adopt a lighter version of this. We can tell our story – everyone loves a story. We can make employees feel part of that story, because they are part of that story. Storytelling is how people learn best.

Why don’t you tell your story?

Maintenance is cheaper than repairs

The best E&C programs kick the tires on a regular basis.

They understand that a program cannot run forever without adjustments, maintenance and repairs.

In a large organization, a program will have several elements: antitrust, anti-corruption, government contracting, international trade, privacy, cyber-security, ethical culture, etc. At any given time, one element is in the hot seat, getting all the attention, while another is considered safe and ignored.

A good program will make sure that no element is ignored for too long. Every fews years at the most, we need to kick the tires. If it can’t be done in-house, competent consultants can do this work quickly and at a reasonable price. It’s easy to budget for.

Regular maintenance is often cheaper than repairs.

Have your pick

Over the last 10 years, I have had the privilege of traveling to 26 different countries (most multiple times), touching every continent except Antarctica.

Some countries are rich and some poor, some have a firm rule of law and some don’t, some tolerate corruption more than others, and others offer more basic human rights than some.

Everywhere I have met happy and hopeful people. Employees who want to do the right thing. Colleagues who understand the importance of rules and values.

Thanks to the internet and mobile devices, organizations now have access to a talent pool of a few billion workers.

It’s never been easier to find and attract those who share our values.

We can have our pick.

People like us don’t cheat

Organizations with a strong safety culture never tell their employees that they must comply with safety measures to avoid government penalties. Instead, they speak of the importance of everyone returning to their families every night in good health.

Yet, when it comes to corruption, most organizations wave the latest billion-dollar fine in front of their employees as if avoiding such fines was the driver for honest behavior. Would they not care if the fines were smaller?

Ethical leaders tell their followers “People like us don’t cheat, lie, or steal. We win the right way, on the merit of our products and services. Others can trust us because we perform with integrity, always.”

Lazy managers use scare tactics. Ethical leaders inspire principled performance.

Opportunity cost

There is so much we could be doing in the world of ethics and compliance. More than we could ever accomplish.

Thus we must be mindful of the opportunity cost and not let the good be the enemy of the best.

The choices are not only between activities like training and audit and investigations, but also within all these activities. Will we train on conflict of interests or on corruption or on harassment?

We must draw a list and prioritize it by asking “If i insert this item on the list, what other activities can i push down? Which one can I afford not to do?” It sounds obvious but too many of us get caught in the activity trap. We realize it only when something goes wrong and someone asks why we weren’t able to prevent it. We protest by pointing at our full plate, and that’s usually when we have our first critical look at what’s on it.

I have found that saying a mental “no” to new activities is helpful. If abstaining doesn’t shock the conscience, then it might be best to do so.

I don’t vs. I can’t

A study has shown that people who say “I don’t do X” feel more empowered than those who say “I can’t do X”, and thus are less likely to X.

When we train our employee about, say, corruption, what is our message?

“We don’t bribe”, because this is not who we are? Or,
“We can’t bribe”, because it is illegal and the fines are huge?

It is much easier to teach the law. However, teaching values and ethics can prove much more effective.

Compliance obligations and commercial strategy

About one year ago, the Mexican Congress passed a law creating the National Anti-Corruption System, aimed at combating corrupt practices at all levels of government. Mexican businesses have started to implement new requirements to effectively combat corruption. Not one sector or industry is immune to being exposed to corruption from the public sector. It is estimated that 40% of Mexican companies have lost business to a successful bidder who paid a bribe.

Below is a list of measures that the best Mexican companies have taken to minimize the risks of corruption. These measures make sense in any country where corruption is a concern. The genius of these compliance measures is that they were incorporated in the business strategy rather than being pitted against it.

Don’t let the enemy in. Implement robust screening for all employees, especially managers and those with access to company funds. All third-parties should be screened, especially those interacting with government entities.

Send a powerful message. Communicate clearly, unequivocally, and repeatedly your commitment to operate legally and ethically. Train your employees and third-parties. Your third-parties’ activities should be reviewed regularly.

Beware of the usual suspects. Be suspicious of newly created vendors with seemingly incompatible or unrelated offerings.

Don’t forgive offenses. Don’t turn a blind eye when violations are discovered. It increases the likelihood repeated violations. Foster a working relationship with local law firms and regulators to help you investigate and prosecute wrongdoing.

Be ready to walk away. Sometimes, the business opportunity is simply not worth the risk.

Above are my reading notes from “Corruption in Mexico: Charting a course for success amid scandals”, by David Gonzalez, Ethisphere Magazine, Q4/2015, p. 28

The Embassy Analogy

I just returned from 3 days in New Orleans where I participated in the Ethics & Compliance Initiative’s Best Practices Forum. I was one of about 100 practitioners discussing how best to evaluate an E&C program.

During one of the roundtable discussions, a colleague asked how others deal with cultural differences around the world. When it was my turn to speak, I offered the “embassy analogy”.

When we walk into an embassy, we legally walk into a new country. The laws of the embassy’s country now apply to us. This is something we need to think about before we walk into an embassy.

Similarly, when we walk into our place of employment, we agree to follow the company’s rules and abide by its values. We might work in a country that doesn’t protect employee safety as much as our company, or allows employment discrimination based on race or gender, or doesn’t enforce its bribery laws. These “cultural differences” should be seen as irrelevant by ethical employers.

In a way, a company is like a tribe. My favorite definition of a tribe is: “People like us do things like this.”* If we refuse to pay bribes – or hurt the environment, or discriminate – people like us will come work for us and buy our products. Others won’t. And that’s just fine because we don’t want them. Our goal is not to be a company that everyone wants to work for. We just want the people who share our values. Others can go work somewhere else. No one has to work for us.

This attitude should not be mistaken for a belief that our values are better than those adopted by other groups or organizations. Different values could be just as good. And, who knows, maybe we are living by the wrong set of values. The point simply is that we have intentionally chosen our values and living by them should be a condition of employment.

Do you agree with the embassy analogy? Let me know in the comment section below.

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*HT to Seth Godin