John McCain died over the weekend. I cannot think of a much better example of someone who continually sacrificed himself for his country than McCain. He was the son and grandson of US Navy Admirals; was shot down over North Vietnam and was tortured mercilessly by his captors. He was eventually released when the war ended for America. He dove into public service, representing Arizona First Congressional District from 1982 to 1986 when he took up residence in the US Senate, where he served until his death. One word often associated with McCain was integrity.

McCain was a well-respected Senator, always known for his maverick streak, no more so on display than in the 2000 Republican presidential primary when he ran the “Straight Talk Express” campaign, which was one of the most successful examples of retail politics. One reporter later recounted, “McCain talked all day long with reporters on his Straight Talk Express bus; he talked so much that sometimes he said things that he shouldn’t have, and that’s why the media loved him.” While McCain did not win the 2000 nomination, he was the party’s nominee in 2008.

How well was McCain thought of by his colleagues? Not only will his body lying in state at the Senate this week but a Senator from the opposition party has said he will put forward a motion to rename the Senate’s Russell office building after McCain. As noted in the online publication Slate, “The suggestion by the top Democrat in the Senate amounted to an acknowledgment of how McCain built up a lot of respect and goodwill among Democrats as well as Republicans after serving Arizona for more than 30 years on Capitol Hill.” Finally, both of his former presidential opponents George W. Bush from the 2000 GOP primary and Barrack Obama from the 2008 General Election will be giving eulogies at McCain’s funeral. You should also note who is not invited – President Donald Trump.

I thought about McCain and his legacy in connection with a 2012 Harvard Business Review (HBR) article, entitled “Greased Palms, Giant Headaches”, by Dan Currell and Tracy Davis Bradley where the authors considered what a company should do when short term goals cause pressure, pressure and more pressure for increased revenues. The authors acknowledge that a robust compliance program is a key component for protection against bribery and corruption by employees, but they believe that more is needed. They identify “Integrity Capital” as a key component to “lower levels of misconduct along with higher levels of reporting when employees do witness wrongdoing. Integrity capital is embedded in the culture, not instituted through controls, and it helps shape employee behavior, which could include offering a bribe or defrauding the company.” The authors identify the following as five factors of Integrity Capital:

  1. Management takes action when it becomes aware of misconduct.This means that companies “must insist on a swift response to complaints, unbiased investigations” and even “public hangings” of offenders.
  2. Employees are comfortable speaking up about misconduct and don’t fear retaliation. While this would seem to be self-evident, it is a sad fact that in many companies, whistleblowers are ostracized or even blamed for the conduct in question. Witness the initial response by Wal-Mart management in the 2005-timeframe to allegations of corruption made by an employee with knowledge of the conduct. He was blamed for the conduct at issue. Even in the allegations brought to light with European Aeronautic Defence and Space Company (EADS), the whistleblowers were marginalized or worse by the company.
  3. Senior leaders and managers treat employees with respect.The authors believe that in addition to not mistreating whistleblowers, companies should “praise employees who have the courage to call out wrongdoing.”
  4. Managers hold employees accountable.Simply put, if an employee engages in bribery or corruption, they need to be disciplined or discharged. Allowing high revenue generators or high-income generating territories or business units to avoid scrutiny and/or sanctions is a clear recipe to destroy the integrity of a compliance program.
  5. High levels of trust exist among colleagues. Your employees must believe that the company will take allegations seriously and will act on the information that they provide.

The authors conclude their article with three different concepts which they believe will minimize the occurrences of bribery and corruption within an organization. First, a company should use commonsense observation. If an emerging market shows success in “speeding things along”, such as regulatory approvals for the construction of bricks-and-mortar facilities, this made need to be looked at closer. Since regulatory approvals do not happen quickly in BRIC countries, it may be that the skids were greased with cash to pay bribes. The second is that a company must be proactive in seeking out and obtaining information from employees about allegations of bribery and corruption. The authors “advise companies to also proactively solicit information from frontline employees and to use surveys or online tools to guarantee anonymity” in reporting allegations of bribery and corruption. Lastly, the authors insist that companies have organization justice so that if there are credible reports of misconduct they are not swept under the rug.

Currell and Bradley provide interesting observations which can be used by a compliance professional to evaluate the sufficiency of their compliance program. Their thoughts on things to look for from an emerging market provide solid guidance on searching for potential red flags which might warrant further investigation from internal audit or a Foreign Corrupt Practices Act (FCPA) based compliance audit team. There are a number of practitioners and ethicists who talk about the need for ethics in any company culture to compliment a compliance program. The HBR article provides some of guidance on what that may look like.

John McCain was a great American, certainly one who put the interests of his country far ahead of his own personal gain. With all the corruption embedded in the current administration his example should continue to shine a light one how one can be principled and move forward.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2018

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