Welcome back Richard. This is now our third Q & A in the Experts’ Corner, and I appreciate your bringing a front-line perspective to the Ethic Intelligence community. I know you recently wrote a blog piece on the OECD Foreign Bribery Report, but perhaps you can share some more of your reflections.
Thank you, and I appreciate the invitation to return to Experts’ Corner, especially in the context of the OECD Bribery Report, which I have found to be extremely relevant and resonating. As it states in the introduction “in order to fight corruption and win, we have to know our enemy,” and the Report really does an incredible service by drilling down into the details of what that actually means.
So, to use your words, what “resonated” first?
Clearly, the identification of corporate leadership as “involved, or at least aware, of the practice of foreign bribery in most cases,” which as the Report elevates, rebuts the “perceptions of bribery as the act of rogue employees.” As the Report states, this demonstrates “the need for a clear ‘tone from the top’ in implementing corporate anti-bribery programs.” When we look back at the enforcement actions of 2014 -and here I am not a regulatory expert – but from my readings, we still do not see any inward examination of corporate practices, including mixed messages of “the way we do things around here” as well as other behaviors and conduct which have played a role in how and why front-line employees engage in corruption.
So, how does the OECD Report make a difference?
As the report states, it brings us “for the first time, face to face with our foe.” Perhaps by now elevating what many have been sharing, including those like Alison Taylor, who examines the connectivity between organizational behaviors, risk and business strategies, we can now have some real and focused examination of corporate policies (stated and unstated) with respect to corruption risk. In other words, I think the OECD Report raises the bar as to what shareholders, employees, and hopefully, regulators, can expect from corporations when they develop a response plan to existing enforcement actions and as to what can be anticipated from current compliance efforts. My hope is that such higher expectations might serve to amplify the OECD findings by making it more difficult for corporate executives to distance themselves from the “front line” in compliance efforts and programs. Perhaps such an enlightened discourse might include how incentives, business plans and regional growth strategies interplay with those who work on the front lines of international business. I continue to ask if corporate compliance programs align with the unspoken organizational messages of “how we get things done around here” as articulated through bonus plans and financial forecasts. When sales forecasts are achieved in high-risk (low integrity) regions, is it all “high fives” in the C-Suite and Board Rooms, or is someone asking, “How did we get there?” I think the OECD Report now makes it obvious that, all too often, “no one is asking.”
I know you wrote about the use of debarment as a deterrence and enforcement tool. Can you share more on this subject?
The Report states “the corrupt must be brought to justice,” and as one who was brought to justice, I have experienced first hand, the impact of individual deterrence. Yet of the 427 cases analyzed in the OECD Report only two resulted in debarment, of which I am one. Given the economic consequences of debarment, which can be severe, I would think that it would be a useful tool to promote deterrence and act as a sanction. While both corporations and enforcement agencies often describe debarment as “too catastrophic”, it does not have to be. As in my own case, it can be on a temporary basis, and it can be an instrument of negotiation, perhaps applied only to export restrictions for example, and limited in scope. Who would argue that a company being banned from exporting to a country where it had bribed is an inappropriate sanction? As the OECD Report states “countries need to ensure that entities and individuals found to have bribed foreign public officials in international business can be and are debarred from participation in national public procurement contracting.” So, where are the teeth to that recommendation?
You seem rather passionate about this issue?
I am, but consider the reason. We have corporate entities and individuals bribing public and state officials, yet they are allowed to continue to engage in public procurement activities. As someone who has gone through the experience of suspension, debarment and appeal, with respect to the US government, let me share one reflection: it is a fair process. The US government provided my attorney and me with an appropriate and well-articulated rationale for my debarment. They also gave me a fair opportunity to appeal as to why the period of my debarment might be shortened. They read a rather lengthy brief which we (through my Attorney) prepared, and responded in detail with a ruling that reflected both my illegal conduct and mitigating behaviors in order to calculate a fair period of debarment (which resulted in a reduction) that was in the public interest. Thus, it is a process that really does work, so why isn’t it being used? From my perspective, it remains a valuable tool in enhancing both deterrence and enforcement. Furthermore, as I point out in my blog piece, there are numerous policy options to protect innocent workers and government agencies who were not part of the illegal conduct and who would be unfairly impacted by a “wide band” debarment. Thus, as I have seen from my own experience, it can indeed be tailored to the conduct and designed to protect those who have an honest and ethical interest in the continuation of business.
Any additional thoughts?
I think there are a number of other elements which might surprise some, such as “where the bribes are being paid,” which shows that it is not entirely from the least developed countries. As the Report states, “we should revisit the common perception that bribery only occurs in the less mature markets.” Given my own conduct, which occurred in places including New York and Amsterdam, while the Report findings came as no shock to me, I hope that it might help others to re-think their perception of geographical risk. Finally, as the Report concludes, “foreign bribery is a complex crime,” occurring in countries and locales which makes investigation and corporate oversight quite challenging.” I hope that the OECD Report will help decision makers from multinationals realize that the risks associated with bribery are not as they might have stereotyped. Such realizations might serve to better provide those who work on the front lines (and those who are tasked with helping them to manage corruption risk) with more practical tools in their work. If executives embrace these elevated realities, then the OECD Report will have served as a useful and beneficial tool for the business community.