Connie Hawkins died over the weekend. For anyone who watched professional basketball in the late 1960s or early 1970s, you will certainly remember Hawkins (aka the ‘Hawk’). He was the precursor to Dr. J, Michael Jordan and LeBron James. No one had seen his combination of size, speed, arm-length and quickness in the pro game. Larry Brown has called him the greatest player he has ever seen play basketball. He truly was a first in pro basketball. Unfortunately for Hawkins, he was unfairly deprived of displaying his skills in the National Basketball League until he was 27 as he was wrongly banned from playing the league due the mere fact of being interviewed in a point-shaving scandal.

According to his obituary in the New York Times (NYT), near the time Hawkins was scheduled to enroll as a freshman at the University of Iowa, “College basketball at the time was engulfed in its second point-shaving scandal after players had received money from gamblers to affect the final score of games. Hawkins was questioned by the New York City authorities about possible connections with one of the fixers, but he was never accused of wrongdoing. Nonetheless, he was banned from collegiate play and the N.B.A.”

Hawkins began his career with the Harlem Globetrotters and later starred in the original American Basketball Association (ABA). Hawkins later “sued the N.B.A. on antitrust grounds, arguing that the league had in effect illegally banned Hawkins and deprived him of the “opportunity to earn a livelihood.” They won. The league paid Hawkins a settlement of nearly $1.3 million and dropped the ban. Hawkins joined the N.B.A. in 1969 and became an instant star with the [Phoenix] Suns.”

Hawkins story informs today consideration of investigations and discipline under the Foreign Corrupt Practices Act (FCPA) for as was made clear in his biography, Hawkins story showed “how an underprivileged black man was victimized by a fat-cat, unfeeling Establishment.” In the Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs (Evaluation), Prong 8 Incentive and Disciplinary Measures it states: Incentive System Consistent Application – Have the disciplinary actions and incentives been fairly and consistently applied across the organization? 

In the DOJ’s 13 point minimum best practices compliance program, Item 10 states:

  1. Discipline. A Company should have appropriate disciplinary procedures to address, among other things, violations of the anti-corruption laws and the Company’s anti-corruption compliance code, policies, and procedures by the Company’s directors, officers, and employees. A Company should implement procedures to ensure that where misconduct is discovered, reasonable steps are taken to remedy the harm resulting from such misconduct, and to ensure that appropriate steps are taken to prevent further similar misconduct, including assessing the internal controls, ethics, and compliance program and making modifications necessary to ensure the program is effective.

The DOJ best practices are more active than the ‘stick’ of employee discipline to make a compliance program effective and I believe that it also requires a ‘carrot’. This requirement is codified in the US Sentencing Guidelines with the following language, “The organization’s compliance and ethics program shall be promoted and enforced consistently throughout the organization through (A) appropriate incentives to perform in accordance with the compliance and ethics program; and (B) appropriate disciplinary measures for engaging in criminal conduct and for failing to take reasonable steps to prevent or detect criminal conduct.” Finally as the 2012 FCPA Guidance stated, “No matter what the disciplinary scheme or potential incentives a company decides to adopt, DOJ and SEC will consider whether they are fairly and consistently applied across the organization.”

One of the areas which Human Resources (HR) can operationalize your compliance program is to ensure that discipline is handed out fairly across an organization and to those employees who integrate such ethical and compliant behavior into their individual work practices going forward.

Procedural fairness is one of the things that will bring credibility to your compliance program. Today it is called the Fair Process Doctrine and this Doctrine generally recognizes that there are fair procedures, not arbitrary ones, in processes involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair. Adhering to the Fair Process Doctrine in two areas of your compliance program is critical for you, as a compliance specialist or for your Compliance Department, to have credibility with the rest of the workforce. Finally, it is yet another way to more fully operationalize your compliance program.

Internal Investigations

The first area is that of internal company investigations. If your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Further, those involved must have confidence that any internal investigation is treated seriously and objectively. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the process will be fair.

This fairness has several components. One would be the use of outside counsel, rather than in-house counsel to handle the investigation. Moreover, if company uses a regular firm, it may be that other outside counsel should be brought in, particularly if regular outside counsel has created or implemented key components which are being investigated. Further, if the company’s regular outside counsel has a large amount of business with the company, then that law firm may have a very vested interest in maintaining the status quo. Lastly, the investigation may require a level of specialization which in-house or regular outside counsel does not possess.

Administration of Discipline and Employee Promotions

However, as important as the Fair Process Doctrine is with internal investigations, I have come to believe it is more important in another area. That area is in the administration of discipline after any compliance related incident. Discipline must not only be administered fairly but it must be administered uniformly across the company for the violation of any compliance policy. Simply put if you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. It cannot matter that the North American employee is a friend of yours or worse yet a ‘high producer’. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.

In addition to the area of discipline which may be administered after the completion of any compliance investigation, you must also place compliance firmly as a part of ongoing employee evaluations and promotions. If your company is seen to advance and only reward employees who achieve their numbers by whatever means necessary, other employees will certainly take note and it will be understood what management evaluates, and rewards, employees upon. I have often heard the (anecdotal) tale about some Far East Region Manager which goes along the following lines “If I violated the Code of Conduct I may or may not get caught. If I get caught I may or may not be disciplined. If I miss my numbers for two quarters, I will be fired”. If this is what other employees believe about how they are evaluated and the basis for promotion, you have lost the compliance battle.

If you ever were able to see Connie Hawkins play basketball, you could not walk away without being in wonder of his grace, power and seeming suspension of gravity with some of his dunks. The National Basketball Association (NBA) still carries a very black eye over its treatment of Hawkins, whose greatness was confirmed by his enshrinement in the Basketball Hall of Fame in 1992. His story reminds us all that in addition to the importance of getting investigations right, companies must uniformly apply discipline throughout its organization.


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© Thomas R. Fox, 2017