Richard Bistrong has been contributing to the ETHIC Intelligence Experts’ Corner for a couple of years now, but he usually does it from the comfort of his office. This time, however, with the termination of probation and return of his passport in January 2017, he has been traveling. Richard has recently visited Beijing and Shanghai to address law firms, multinationals, and cross-industry compliance groups. He shares some of his observations of corruption prevention and compliance in China.
What would you consider one of the biggest differences between how western based multinationals and professionals view the challenges of corruption prevention and the Chinese perspective?
In today’s compliance environment, we see a very robust debate on what the new U.S. administration might mean for anti-bribery compliance, the new ISO standard, and the recent DOJ “Evaluation of Corporate Compliance Programs” memo, but those weren’t on anyone’s “what keeps me up at night” moments in China. From my conversations and participation in panels and conferences, it became evident that much of the focus was on the “what happens when local customs conflict with the rules” dilemma. And that’s not to say that there’s an inherent conflict in China between ethical business practices and commercial success, but in an emerging market environment, with a young, dynamic and engaged workforce, the challenge is daunting, and not to be ignored.
Could you describe a compliance challenge unique to working in China?
Compliance programs in China, like anywhere else, address the importance of lawful and ethical conduct, but during my seven days in-country, I saw a profound focus around “how to execute on both values and objectives,” in an environment where people are extremely focused on success, and the rewards of success. This desire to succeed manifests itself in a way that’s much different in an emerging economy than in a developed one. Employment with western based brands are coveted jobs, and commercial teams are anxious to demonstrate their ability to execute on financial objectives – in other words, to succeed. But that goal driven model often widens what’s a cultural and operational disconnect between the support functions at HQ and those forward based teams which are deployed in less supervised locales. And you can’t bridge those gaps with compliance paperwork and contracts.
So, it’s often left to the compliance team to work as partners with commercial leaders to define and embed success in a way that’s deeper than quantifiable commercial objectives, and to do so without ambiguity. If that sounds easy, it isn’t. It also becomes more complex in cultures where people might feel more reserved and apprehensive about speaking up where there’s tension between objectives and ethics. Encouraging commercial and compliance teams to talk about those tensions together was one of my goals.
What did you witness on the issue of leadership that was different from your previous experience?
One executive called on mid-level leadership to be “servant leaders.” That really captured my attention, as he empowered his executive teams to push power down into the organization instead of up. As defined in The Center for Servant Leadership, a “servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. While traditional leadership generally involves the accumulation and exercise of power by one at the ‘top of the pyramid,’ servant leadership is different. The servant-leader shares power, puts the needs of others first and helps people develop and perform as highly as possible.”
What about passive and active bribery?
In China, corruption can intersect a work-force in both directions, as bribe payers as well as receivers. Commercial personnel who are responsible for dealer, intermediary and distributor networks might be subjected to requests for bribes, passed through those third parties to government officials- a set-up that’s familiar. But in China, employees are also exposed to the receiving side of corruption, as dealers might want to curry favor with respect to discounts, product allocations or marketing allowances through corrupt offers.
In an environment, which is based on relationships and hierarchy, that’s a complexity that might be hard to appreciate unless you are in front of it. It’s much more than anti-corruption compliance, it’s about ethical conduct in a broader sense, on hours and off. And those offers don’t come, or they don’t start, with brown bags of cash or numbered off-shore accounts. A dealer offering his beach flat for a holiday weekend to an employee might seem innocent enough, until a situation arises where that dealer might need a special allowance or discount. It’s a peril that often hides under the radar of friendship and association.
How are Chinese companies meeting these challenges?
What I saw was an appreciation for and focus on how to develop a commercial workforce free of conflict of interest, and how to inspire commercial leaders to embrace their roles as brand ambassadors. And those efforts were backed up, including my own experience, with a “you can’t hide bad conduct behind your third parties,” and “what you don’t know can hurt all of us.” We spent a lot of time sharing with the workforce how they have an obligation to know the values and integrity of the people they do business with, and not to switch their ethical radar “off” after the third-party vetting process. In China, with state investment and divestment in industry and commercial entities, risk can quickly change over the life of a relationship.
Thank you, Richard, so what’s next?
I am excited about addressing upcoming anti-corruption events in Amsterdam, Oslo, Hong-Kong and San Paolo. If anyone would like information on the conferences, feel free to visit my events page at www.richardbistrong.com or e-mail me at email@example.com. And of course, I intend to come to Paris to visit my friends and colleagues at ETHIC Intelligence!
Richard Bistrong, CEO
Former FCPA Violator & FBI/UK Cooperator
Richard Bistrong spent much of his career as an international sales executive and currently consults and speaks on foreign bribery, ethics and compliance issues from that front-line perspective. Richard was the Vice President of International Sales for a large, publicly traded manufacturer of police and military equipment, which included residing and working in the UK. In 2007, as part of a cooperation agreement with the United States Department of Justice and subsequent Immunity from Prosecution in the UK, Richard assisted the United States, UK, and other governments in their understanding of how FCPA, bribery and other export violations occurred and operated in international sales. In 2012, Richard was sentenced as part of his own Plea Agreement, and served fourteen-and-a-half months at a Federal Prison Camp, returning home in December 2013.
Richard now consults, writes and speaks about current front-line anti-bribery and compliance issues. Richard was named one of Ethisphere’s 100 Most Influential in Business Ethics for 2015 and is a Contributing Editor of the FCPA Blog. Richard’s chapter “The Anatomy of a Bribe” appears in the 2016 edition of the Trace International How to Pay a Bribe. Richard was also recognized by JD Supra as Top Author in the 2016 Readers Choice Awards, for Compliance. Richard has also presented to the World Bank, the International Anti-Corruption Academy, as well as to multinationals and conferences on a global basis.
The ETHIC Intelligence Expert’s Corner is an opportunity for specialists in the field of anti-corruption compliance to express their views on approaches to and developments in the sector. The views expressed in these articles are those of the authors.
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