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Business Ethics News from Ethikos


Evolution of the Chief Ethics and Compliance Officer

April 24, 2012 -- Twenty years ago Elliot A. Fisch, Chief Compliance Officer at Easton Bell Sports (Van Nuys, CA), would have had a much simpler job.

“I would say 20-25 years ago we were asked to do three things,” recalls Fisch, speaking to an audience at Ethisphere’s Global Ethics Summit in March, “Hotline, training, and code of conduct. That was it.”

In the past ten years, Fisch has seen that change. “I cover a lot more things. I do fraud review, risk views. I do due diligence. I'm basically the ‘red flag’ person with the board.”

This progression is only natural, according to Alan Yuspeh, Chief Ethics and Compliance Officer (CECO) at Nashville-based Hospital Corporation of America (HCA).

“My experience is that it always should have been broad.” It also means drawing on best practices from beyond one’s own industry. When HCA developed a guidebook that set clear definitions as to what an employee’s job entailed, for example, it borrowed from the practices of other companies, such as McDonnell Douglas, whose ethics and compliance program was well regarded. “Even going back into the 1980s, you had people saying that this should be broad in scope.”

The expanded resources available to chief ethics and compliance officers today are reflective of a greater creativity in how they are able to approach issues, suggests Yuspeh. For example, when he began in this area, there was no compliance review process—something he now finds extremely useful. Training is also an area which has broadened in the past ten years.

In terms of the requirements of the CECO role today, Yuspeh cites three key elements:

  1. 1) This is a role that should be a part of the senior team at an organization. You need to be able to act independently and report directly to the board.
  2. 2) Explicit commitment from the very top people in the organization is mandatory. The company’s stance should be: If there’s a compliance risk we expect you [the CECO] to look at it.
  3. 3) Constantly fight the battle of ‘This is important.’ “People don’t necessarily understand what the CECO does. You have to be proactive. You have to take the time to add something to the conversation.”

This means gaining insight and an understanding of the operating businesses to match that of senior management.

“Are we truly independent of the organization?” asks Kimberly Strong, Chief Ethics and Compliance Officer of Con Edison, another speaker at the Summit. “It would be ideal, but we all have bosses. We serve as mirrors of the behavior of the organization. Dodd-Frank has said: ‘Come report to us [the government] because we don't think your [company reporting] functions are working.’” It behooves corporations to make their CECOs as independent and effective as possible so employees do feel comfortable reporting wrongdoing internally, she suggests.

A longer version of this article will appear in an upcoming print edition of Ethikos.

(Posted April 24, 2012)


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Should the Chief Compliance Officer report to the General Counsel? Not in My Company

April 17, 2012 — To whom should a company’s chief compliance officer (CCO) report? It’s a question that has ignited some surprisingly heated discussion lately.

In the most recent flare-up, Ben Heineman, Jr., General Electric Company’s former general counsel, suggests in Corporate Counsel magazine that the CCO “as process expert/manager” should report to both the general counsel (GC) and chief financial officer (CFO)—“even though some articulate members of the CCO movement, reflected in the growth of the Ethics and Compliance Officer Association, just as strongly disagree.”

A longer version of this article will appear the upcoming May/June 2012 print edition of Ethikos.

(Posted April 17, 2012)


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When Your Company Is Accused Of Violating the Foreign Corrupt Practices Act

April 10, 2012 -- As anti-bribery legislation becomes more widespread, and regulators grow more proactive, the possibility of prosecution under the U.S. Foreign Corrupt Practices Act (FCPA) looms larger for companies doing business overseas.

More corporations will soon be conducting their own internal FCPA investigations, and when that happens, a company has some decisions to make. “Obviously it depends on what comes in, and from where,” says Michael B. Mukasey, former Attorney General of the United States, now a litigation partner with Debevoise & Plimpton LLP, referring to reports of alleged wrongdoing. “What comes from inside the company and what comes outside? Which of the company’s business levels does it involve? At what level of the government are they alleged to have interacted?”

A longer version of this article will appear in an upcoming May/June 2012 print edition of Ethikos.

(Posted April 10, 2012)


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China’s Anti-Bribery Legislation: A Work In Process

While there has been much talk in the past year about the UK Bribery Act, and the recent burst of prosecutions under the U.S. Foreign Corrupt Practices Act (FCPA), China quietly passed its own ‘FCPA-like’ law in 2011. Just how will this law affect businesses abroad?

“China is one of those markets in which companies are already invested and if not, they will be there soon,” noted Scott Lane, CEO of The Red Flag Group, an advisory firm. “It's not very much what is said in the law--the law is one sentence. It's what is not said,” said Lane, speaking last week at the Dow Jones Global Compliance Symposium’s panel, ‘China: What Does Its Foreign Bribery Provision Really Mean For Your Company?’

A longer version of this story will appear in an upcoming print edition of Ethikos.

(Posted April 3, 2012)


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Emerging Unscathed from Emerging Markets

When Travelex Currency Services, the retail foreign exchange specialist, first considered expanding into Panama and Brazil, it asked some tough questions:

“First, is this a jurisdiction where we can uphold our values?” recalled Daniel L. Tannebaum, Chief Compliance Officer. “And secondly, is this a jurisdiction where we can keep our staff safe?”

In the case of Brazil, the move came after a ten-year partnership, said Tannebaum, speaking this morning at the Dow Jones Compliance Symposium in Washington, D.C. “You go in, you learn the laws. Once you get comfortable with the laws you meet with the UK Embassy and the US embassy, and you build out from there.”

A longer version of this story will appear in an upcoming print edition of Ethikos.

(Posted March 27, 2012)


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How General Electric Dealt With A Compliance Breakdown

General Electric’s Brackett Denniston provides a grim example of a compliance issue that can take an organization by surprise:

“We got an ombuds report regarding a compliance failure in our nuclear energy branch,” GE’s general counsel told an audience at the 4th Annual Global Ethics Summit in New York last week. The issue involved reactors that GE had sold to the Tokyo Electric Power Company (TEPCO), the utility that owns the tsunami-ravaged Fukushima Daiichi Nuclear Power Station and provides almost 35% of Japan’s electricity.

"A former employee said GE had been falsifying information about our reactors" with regard to monitoring and maintenance. However, when the issue was initially investigated by GE, many employees told him that everything was fine.

"Then we were told they had lied. TEPCO had asked them to lie about the reactors. They would falsify records." In one case, he noted, inspection videos would be shot in such a way as to avoid showing a crack in a reactor that had been hastily patched.

"It was shocking," recalls Denniston. "The root cause was a weak compliance structure (in Japan). You have to fight the notion that the customer is always right.”

A longer version of this story will appear in the upcoming March/April print edition of Ethikos.

(Posted March 20, 2012)


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Hotline Reporting via Text Message at Office Depot

First there was ethics hotline reporting via telephone. Then came reporting through the Internet. Now some companies are offering employees hotline reporting via text message.

One of these is Office Depot, the Florida-based office supply company, which has 40,000 employees globally. “It’s about keeping up with how people communicate,” Robert Brewer, Chief Compliance Officer, tells Ethikos. “We try to keep our finger on the pulse of technology and how to get our message across.”

The complete article will appear in the upcoming (March/April 2012) print version of Ethikos.

(Posted March 13, 2012)


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Ethics officer swings by A.J. Gallagher branch offices—all 225 of them

February 21, 2012—Thomas J. Tropp, Vice President of Corporate Ethics and Sustainability at Arthur J. Gallagher & Co. (Itasca, IL), is on the road most every week. Last year he visited most of the insurance brokerage firm’s 225 global offices—from Singapore to Sao Paulo—speaking and listening to Gallagher employees regarding the values of the company and the role of ethics in business.

Over the last three years, he has addressed more than 10,000 of the company’s 13,000 employees in small group settings.

The complete article will appear in the upcoming (March/April 2012) print version of Ethikos.

(Posted April 28, 2012)

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How Siemens Bounced Back After a Scandal

February 14, 2012 -- The key to regaining public trust after a scandal is the swiftness of a company’s response, the accuracy of its problem diagnosis, and the installation of proper mechanisms to prevent the problem from occurring again, says the UK’s Institute of Business Ethics (IBE).

One of the companies IBE follows in a study published this week is Siemens, the German engineering giant that came under fire in 2006 for siphoning off millions of Euros into “phoney consultants’ contracts, false bills and shell firms” in order to pay massive bribes to win contracts. A trial judge condemned the company’s actions as “a system of organized irresponsibility that was implicitly condoned.”

But Siemens eventually turned things around.

(Posted February 14, 2012)

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Anti-Corruption Enforcement Gains Traction on a Global Scale

January 31, 2012 -- You probably can’t find a country in the world where bribery is legal, says Brian Loughman. But anti-bribery laws mean nothing if they are not enforced. That’s why recent developments are encouraging.

There’s been a “huge ramp up in [anti-corruption] enforcement activity” globally, notes Loughman, Americas Leader, Fraud Investigation & Dispute Services, Ernst & Young LLP, and co-author of Bribery & Corruption: Navigating the Global Risks, published January 26 by John Wiley and Sons.

“Germany has been very active.” And not just in prosecuting big name cases like Siemens’, Loughman told Ethikos. Germany had 135 foreign bribery enforcement cases in 2010, second only to the U.S.’s 227 cases, according to Transparency International’s 2011 Progress Report.

(Posted January 31, 2012)

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When it comes to company reputation, avoiding scandal and wrongdoing trumps CSR, survey finds

January 18, 2012 -- People are more likely to buy products from an organization with a good reputation than one that is financially successful, with more than half of consumers admitting they are more confident buying products from a company with a ‘most admired’ standing.

60% of a company’s market value is based in its reputation, according to a global study commissioned by PR Firm Weber Shandwick. This is why a number of companies have increased their efforts to build a good ‘company reputation’ in the past few years: 6 in 10 executives say they would rather see their company in the news for ‘admired standing’ than for financial accomplishments.

(Posted January 24, 2012)

Ryder Gets Resourceful With Ethics and Compliance Training

Many companies today deliver ethics and compliance training to their employees online. They can learn about the company’s rules and policies while sitting at their office desks. This works well — up to a point.

But what do you do at a company like Ryder System, Inc. (Miami), the transportation and logistics company—best known for its fleet of rental trucks—whose 25,000-plus work force includes many drivers and warehouses workers who do not have easy access to computers. How do you train them?

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An Argument for an ‘FCPA Compliance Defense’

From 2000 to 2003, Lucent Technologies spent more than $10 million for some 1,000 Chinese foreign officials—employees of Chinese state-owned or state-controlled telecommunications enterprises—to travel to the United States and elsewhere, ostensibly to inspect Lucent's factories and to be trained in using Lucent equipment.

(Posted January 17, 2012)

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‘Tremendous’ advantage in conducting ethics investigations in-house, says AECOM

Susan Frank runs the global ethics and compliance office at AECOM (Los Angeles), the engineering and project development firm with more than 45,000 employees around the world. She heads a full-time staff of six that includes two certified fraud examiners and an investigations attorney.

This story will appear in its entirety in the upcoming print version of Ethikos (January/February 2012).

(Posted January 10, 2012)

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U.S. Targeting More Foreign Nationals in FCPA Cases

In 2011, U.S. enforcement authorities continued their emphasis on prosecuting individuals for Foreign Corrupt Practice Act (FCPA) violations, charging 18 individuals.

However, a number of recent trials have “underlined the difficulty that U.S. enforcement authorities, once in court, have in proving foreign bribery beyond a reasonable doubt,” notes Philip Urofsky, a partner at Shearman & Sterling and head of the law firm’s FCPA and Global Anti-Corruption Practice.

(Posted January 3, 2012)

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Focusing on ‘the right kind of profits’

The biggest corporate responsibility events of 2011? “Porter and Kramer's piece in the January [2011] issue of the Harvard Business Review on 'Creating Shared Value' has probably done more to get corporate responsibility issues into the boardroom than anything else written this year,” writes the Sustainable Business Forum.

In “Creating Shared Value,” Michael E. Porter and Mark R. Kramer, argue that “Businesses must reconnect company success with social progress,” avoiding that obsession with short-term financial success that took hold of corporations over the past few decades, a sort of “trap,” in their view.

(Posted December 27, 2011)

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National Grid energized by ‘ethics liaisons’

Many corporations now have ethics “helplines,” a toll free number that employees can call to report wrongdoing, or if they simply have a question—about the company’s ‘gifts’ policy, say.

But some employees still find it daunting to pick up the telephone and call a stranger. Will their call be reported to executives within the company? Will they suffer repercussions?

(Posted December 20, 2011)

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Most Americans will blow the whistle on workplace wrongdoing—if they have protections, survey reports

December 11, 2011 — According to the survey “Actions and Ethics” conducted by law firm Labaton & Sucharow LLP, one third (34%) of all Americans surveyed reported that they have witnessed or had knowledge of wrongdoing within the work place.

But more than three quarters (78%) said that they would gladly report that wrongdoing if it could be done anonymously, without retaliation, and result in a monetary award—as per the SEC’s new whistleblower program.

(Posted December 13, 2011)

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AGCO Corp., Under Investigation, Borrowed a Leaf from Caterpillar

When Debra Kuper arrived at AGCO Corporation in early 2008 as its new vice president, general counsel, and corporate secretary, the company was in trouble.

The Atlanta-based manufacturer of farm equipment had received a subpoena from the federal government in connection with the United Nations’ oil-for-food scandal. The Department of Justice (DOJ) was investigating AGCO and its overseas subsidiaries for corrupt payments and false accounting. A deferred prosecution agreement (DPA), or worse, was looming.

[The continuation of this article will appear in the upcoming print edition of Ethikos.]

(Posted December 6, 2011)

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‘CA Technologies Turns To Humor in Training”

When it comes to ethics and compliance, software giant CA Technologies prides itself on its strong in-house education program. But in the spring of 2009 something was missing. “A lot of our training relied on third party course modules. But this was, and I hate to say it, a little canned,” Joel Katz, the firm”s chief ethics and compliance officer, tells Ethikos.

Employees were just not engaged.

[A longer version of this article will appear in the upcoming print edition of Ethikos.]

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A Few Stats from SEC”s Whistleblower Office

How is the SEC”s whistleblower program faring? In its first seven weeks of operation—from August 12, 2011 through September 30, 2011—the Commission received 334 whistleblower tips.

The most common complaints? ‘Market manipulation” (16.2%) was first, followed by ‘corporate disclosures and financial statements” (15.3%), and ‘offering fraud” (15.6%). ‘Insider trading” and ‘FCPA” were further back, at 7.5 percent and 3.9 percent, respectively.

(Posted November 21, 2011)

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Walgreens: Face-to-Face Ethics Conversations are Critical

If you want to spread the ethics message within a large organization, there”s much to be said for live appearances.

At Walgreens (Deerfield, IL), the giant drug store chain, Chief Compliance Officer Laura Merten and staff spend much time conducting “outreach,” fanning out across the country to meet ‘live” with employees and managers.

(Posted November 15, 2011)

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Swiss and Dutch Companies Least Likely to Pay Bribes—TI Survey

Companies from Russia and China are viewed as the most likely to pay bribes—to both public officials and other private firms—according to Transparency International”s (TI) 2011 Bribe Payer”s Index. Companies from countries that take stronger regulatory action against foreign bribery like the U.S. and U.K. are seen as less likely to do so.

While no country among the 28 ranked scored a perfect ‘10” (i.e. wholly clean and uncorrupt), companies in The Netherlands and Switzerland were deemed least likely to pay foreign bribes, with Belgium, Germany and Japan following closely. (TI surveys gauge respondents” perceptions of bribery, not actual cases of bribery—a distinction that is sometimes lost.) The U.S. and U.K. were in the top ten too.

(Posted November 8, 2011)

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The Sentencing Guidelines at 20 Years (Today!)

October 31, 2011 -- On November 1, 1991, the US Sentencing Commission implemented the Federal Sentencing Guidelines for Organizations (FSGO), which created incentives for companies to self-police organizational wrongdoing. These guidelines sparked an explosion in corporate ethics and compliance programs.

Twenty years later, how are they doing? Although the Guidelines have achieved “significant successes,” according to the Ethics Resource Center (ERC) in a recent report, challenges remain.

(Posted November 1, 2011)

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Companies Still Unprepared for FCPA, UK Bribery Act—Kroll Study

When it comes to issues of global fraud, the greatest new risk may be internal. “We pay a lot of close attention to protecting the business and enterprise from fraud on the outside, but we let our guard inside when in fact there are things that can be done on the inside,” David Holley, Senior Managing Director at Kroll, told Ethikos this week.

According to Kroll”s recently published 2011 Global Fraud Survey, “fraud remains predominantly an inside job.” The study reports that 60% of frauds are committed by insiders, up from 55% last year.

(Posted October 25, 2011)

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More Top Execs Charged in FCPA Cases

Out of 61 individuals who were the subject of government-initiated civil or criminal actions alleging Foreign Corrupt Practices Act (FCPA) violations in the past six years, the majority were president, CEO, or chief operating officer of their respective companies, according to a recent Chadbourne and Parke LLP Compliance Quarterly report.

The largest region of alleged misconduct was Mexico, Central, and South America, accounting for 44% of cases, followed by Asia (32%), Africa (21%), and Europe (3%).

(Posted October 11, 2011)

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Ensuring Employees Report Misconduct Internally

Industry data suggest that most employees still want to ‘go internal” when they see something wrong, according to Luis Ramos, Chief Executive Officer, The Network, Inc. (Norcross, GA). They prefer to tell a manager, an ethics officer, or a human resources specialist about misconduct rather than go ‘outside”—to a government agency like the SEC, say.

There are some practical things corporations can do to ensure that this happens. First, make sure that employees are “keenly aware of [ethics and compliance reporting] programs and that they can access them,” Ramos tells Ethikos. Repetition is critical. “Employees forget if you don”t keep telling them about it.”

(Posted October 4, 2011)

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Sustainability reports: U.S. a laggard but ‘catching up”; UPS delivers some numbers

UPS recently became the first US company to have its annual ‘sustainability” report ‘assured” (vetted) by a Big Four accounting firm (Deloitte).

U.S. companies have trailed Europe and Asia firms in this area. Only one in eight corporate ESG (environmental, social, and corporate governance) reports is "assured" in the U.S., while one in two reports are assured in Europe, notes Ernst Ligteringen, Chief Executive, Global Reporting Initiative (GRI).

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Still a Rarity: Only 29 ‘Chief Sustainability Officers” at U.S. Companies

Of the 7,000 publicly U.S. traded companies listed on the NYSE or NASDAQ, only 29 have Chief Sustainability Officers (CSOs), according to a study conducted by The Weinreb Group.

Chief sustainability officers tend to be veteran employees: “On average, CSOs have been with their respective companies for 16 years. Moreover, 86 percent of them were internal hires.”

(Posted September 27, 2011)

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‘Use of third parties” seen as leading source of corruption risk

Although 90 percent of corporate executives say their companies have an anti-corruption policy in place, only 29 percent express confidence in those policy”s abilities to prevent or detect corrupt activities, according to a recent survey conducted by Deloitte LLC.

Larger companies were more likely to perceive corruption risks than smaller firms, according to the Big Four firm”s “Anti-corruption practices survey 2011.” The study stressed the difficulties of establishing an anti-corruption environment when expanding into emerging markets such as Russia, China, India, and Brazil, with China proving the area of greatest concern to over half the executives surveyed.

(Posted September 20, 2011)

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Medtronic, Woolworths, Xerox added to Sustainability Index; HP, Coca-Cola dropped

The Dow Jones Sustainability Index (DJSI) has released its 2011 annual report, marking a year of some surprising change: Medtronic, Woolworths, Xerox, and Hyundai are among this year”s most notable additions. Among organizations removed from this year”s list: Microsoft, Coca-Cola, Hewlett-Packard, and Volkswagen.

(Posted September 13, 2011)

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IBE: More Women on Corporate Boards‘Helps to Avoid Groupthink”

Female employees often exhibit a stricter ethical standard than men. Indeed, in a survey of 791 British full-time employees, “For seven of ten workplace behavior practices, women were more likely to consider them unacceptable than men.”

This was one of the many observations recounted in The Institute of Business Ethics” (IBE) September Business Ethics Briefing, ‘Business Ethics and Board Diversity.”

(Posted September 6, 2011)

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A Global Leader”s Guide to Managing Business Conduct

Employees in the U.S., Europe, and Japan are in agreement: There are basic standards of conduct that companies should follow worldwide. But actually meeting those standards will require new approaches to managing business conduct, conclude three Harvard Business School professors in an article in this month”s Harvard Business Review (HBR), “A Global Leader”s Guide to Managing Business Conduct.”

Companies should combat bribery in countries where corruption is rampant, most employees agree. “Instructing employees to ‘just say no” and punishing violators might work,” write authors Lynn S. Paine, Rohit Deshpandé, and Joshua D. Margolis—but it carries a business risk and may simply drive corruption underground.

(Posted August 30, 2011)

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Survey on the Influence of Workplace Design & Practices on the Ethical Environment

August 22, 2011 -- The layout of a company”s work space may have a strong influence on employee misconduct, with an open workspace environment promoting more ethical and transparent behavior, according to a survey conducted by Ethisphere and Jones Lang LaSalle

“The separation of staff in cubes vs. staff in offices unfortunately contributes to an ‘us vs. them” atmosphere,” explains one respondent. “The general feeling of those of us in the cubes is that those in offices seem to be allowed to ‘get away with” much more.”

(Posted August 23, 2011)

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Online Monitoring of Job Candidates Raises Disturbing Questions

Many U.S. companies use the Internet to research job candidates, but monitoring firms like Social Intelligence Corp. (Santa Barbara, CA) appear to be taking things to a “new level”—raising disturbing questions about privacy and fairness, a university professor who has studied the issue tells Ethikos.

Social Intelligence provides businesses with archived data from social media sites (e.g., Facebook, Linkedin) for use in the prevention of online damage to their reputations. But such monitoring could create a climate of fear and distrust among employees, explains Diane Swanson, professor of management at Kansas State University.

It also raises questions of fairness. Swanson participated recently in a call-in program on National Public Radio (NPR) on the topic. One caller, a job candidate, reported that a potential employer went back 20 years to find compromising materials that had been posted online. He was denied the job.

(Posted August 2, 2011)

[A longer version of this story will appear in the September/October issue of Ethikos.]

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FCPA Enforcement Raises the Stakes For Kimberly-Clark in Russia

Kimberly-Clark Corporation (Dallas), maker of Kleenex tissues and Huggies diapers, draws about one-third of its $20 billion in annual revenues from outside the U.S. and Europe. It has operations in 36 countries, including factories in Russia and China and other countries with relatively high rates of corruption.

Ethikos recently asked Thomas J. Mielke, Kimberly-Clark”s Senior Vice President of Law, Government Affairs, and Chief Compliance Officer, if recent FCPA enforcement actions in the U.S. had raised the stakes for companies like Kimberly-Clark that operate in Russia and China?

[See the full story in the upcoming issue of Ethikos]

(Posted July 26, 2011)

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Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act

July 18, 2011 — While aggressive Foreign Corrupt Practices Act (FCPA) case action continues to be the trend among U.S. enforcement authorities in the first half of 2011, an increased interest in internal corruption within foreign countries may suggest an expansion of the FCPA”s purpose.

Indeed, a recent report published by Shearman and Sterling suggests the FCPA may be growing beyond its original focus on bribery of foreign officials by U.S. companies:

“Over the past year, and even more so in the first part of 2011, the agencies have focused on Chinese companies who have listed in the U.S. and are alleged to have made fraudulent disclosures concerning their financial results. In some cases, it appears that the government has expanded its investigation to include allegations that these companies may have engaged in improper transactions with Chinese officials.”

(Posted July 20, 2011)

The full story 'Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act', may be found on our Ethikos Library. Library Subscription Required. For more information email us at info@ethikospublication.com

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The Chief Ethics and Compliance Officer: A Test of Endurance

It is the job of a strong Chief Ethics and Compliance Officer (CECO) not only to ensure that regulatory standards are met, but also to make sure that an organization sticks to its core values--and fosters an “ethical culture,” says Patrick Gnazzo, former CECO at CA Technologies and earlier, at United Technologies.

Speaking at Bentley College, Gnazzo offered seven steps an organization might take to support and strengthen the position of Chief Ethics and Compliance Officer:

  • The New York Stock Exchange and the NASDAQ require all of their members to have a code of ethics. They should also require all members to have a CECO to enforce this code of ethics.
  • Organizations should provide their CECO with a sufficient budget and resources.
  • The CECO, like the director of internal audit, should report to the board of directors.
  • The CECO should be included in executive sessions of the board so issues can be raised outside of management, if necessary.
  • The CECO should make quarterly, in-person reports, particularly to the audit committee of the board.
  • Hiring/firing for the position should require approval by the board of directors.
  • The CECO should sit in on organization”s operating, strategic planning, and budget committee meetings

The full story 'The Chief Ethics and Compliance Officer: A Test of Endurance', may be found on our Ethikos Library. Library Subscription Required. For more information email us at info@ethikospublication.com

(Posted July 12, 2011)

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KPMG Survey: Who Is The Typical Fraudster?

A recent global study conducted by KPMG has shed an interesting light on the profile of the average employee most likely to commit fraud.

According to the study, based on investigations conducted in 69 countries, the average fraudster is male, found in finance-related positions, is most likely to commit fraud against his own company, and seldom acts alone. The average fraudster has also been found to be an employee who has been with the organization for some time—with 33 percent of recent cases having worked for the organization for more than 10 years, suggesting that these individuals do not join their organizations with the intention to commit fraud. [...]

The full story 'KPMG Survey: Who is the Typical Fraudster', may be found on our Ethikos Library. Library Subscription Required. For more information email us at info@ethikospublication.com

(Posted July 5, 2011)

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'Confronting Corruption in Emerging Markets'

When Alcoa opened in Russia in 2005, visibility was counted as among the company”s key strengths.

“It was very questionable whether they would even allow us to buy 100 percent of these facilities. We were going to sell into their aerospace industry. They were going to watch us very closely,” William O”Rourke, then-head of Alcoa Russia, told Julia Taylor Kennedy in the latest of Carnegie Council”s Workshop for Ethics in Business series. “[...] So it was pretty high-level. We felt with that kind of visibility, we could push through corruption and bureaucracy.”

Regarding corruption in Russia -- which ranked 154 out of 178 countries in Transparency International”s 2010 corruption index--one of the top issues was cultural: “Part of the training of the Russian managers is that you have to bring them out of this culture of corruption,” said Thomas Graham, one of the experts Alcoa hired to better understand its Russian audience. Bribery was a day-to-day fact of life. A trip to the doctor, for example, required a bribe. “It's things that you do day in and day out, where what we would consider a bribe is actually very natural to Russians.”

The full story 'Confronting Corruption in Emerging Markets', may be found on our Ethikos Library. Library Subscription Required. For more information email us at info@ethikospublication.com

(Posted June 24, 2011)

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'Giving Voice to Values: How To Speak Your Mind When You Know What's Right'

Charles Prince, the deposed former head of Citigroup, said in 2007: “As long as the music is playing, you”ve got to get up and dance.”

He was referring to why on the eve of the great financial crisis so few corporate leaders, who must have seen the warning signs, failed to speak out against business practices that would eventually lead to the great collapse.

Individuals often react similarly when faced with issues of ethical practice in the workplace, according to Mary Gentile in her recent book “Giving Voice to Values.” “When we encounter values conflicts in the workplace, we often face barriers in the form of ‘reasons and rationalizations” for pursuing a particular course of action that can confound our best attempts to fulfill our own sense of organizational and personal purpose,” she writes.

The full story 'Giving Voice to Values', may be found on our Ethikos Library. Library Subscription Required. For more information email us at info@ethikospublication.com

(Posted May 16, 2011)

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Social Investor Explains Why He”s Still Invested with BP


BP held its annual meeting in London last week, almost a year after the company”s oil spill in the Gulf of Mexico.

Social investor groups were on hand—many to vote against BP on a number of proxy issues, including accounts and reports, and the reelection of director Sir William Castell, Chair of BP”s Safety, Ethics and Environment Assurance Committee. The groups criticized BP for a lack of risk management disclosure since the spill, the worst in U.S. history.

One of the dissident investors was Mark Regier, Director of Stewardship Investing at MMA Praxis Mutual Funds.

We spoke with Regier last week.

In light of recent history it was no mystery why social investors, as well as some powerful institutional investors, like California Public Employees” Retirement System, would oppose BP”s senior management. But we wondered why a so-called socially responsible investor would own stock in a multinational oil company like BP to begin with?— Posted April 18, 2011

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Multidisciplinary ‘Team” to Counsel Companies on New Whistleblower Regulations


The whistleblower bounty provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act continue to reverberate through the corporate ethics and compliance community.

Asked where the provisions rank among corporate ethics and compliance developments over the past two decades, Amy L. Goodman, a partner in Gibson, Dunn & Crutcher's Washington, D.C. office, answers: “It”s a 10 out of 10.” The provisions make the key ‘concerns” list of most general counsels these days.

Companies fear that employees of public companies will go directly to the SEC with reports of wrongdoing rather than using internal reporting mechanisms like hotlines—whistleblowers can collect bounties of 10 percent to 30 percent of what the SEC collects from monetary sanctions.

In light of these developments, Gibson, Dunn announced last week that it formed a multidisciplinary “whistleblower team” to offer counsel to corporations on the new statute. Team members are drawn from labor and employment, securities enforcement, corporate governance and securities regulation, white collar defense and investigations, and litigation, among other areas.

When the whistleblower final rules appear in the next month, companies will have to look more closely at their company hotlines, and how they promote those hotlines to employees, Goodman tells Ethikos. There are several concrete steps they can take along these lines...— Posted April 11, 2011.


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