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« SFO posts new guidance on self reporting | Main | Avon's latest FCPA disclosure »
Tuesday
Oct092012

A compliance culture could have saved Penn State's children

Mug shot of former Penn State assistant football coach Jerry SanduskyThe scandal at Penn State moves to its conclusion.  Assistant football coach Jerry Sandusky was sentenced Tuesday to over 30 years in prison. He was convicted after a trial on charges of child sex abuse that involved 10 boys and spanned a decade and a half.

Over the course of a career as the lovable protege of a legendary football coach, Sandusky helped make Penn State rich and famous for its football teams. While his abuse tracked the "grooming of victims" pattern for serial molesters, the institution also went down a familiar path: denial and cover up.

The excuses for misconduct in Penn State's unethical business culture were typical: Nothing happened. If it did, we didn't know about it. And if it did happen and we knew, we're not responsible.

A compliance program meeting FCPA standards might have saved the children. As Tom Fox has recently noted, the Board was uninvolved, the compliance program was an un-funded shell, and the controls ignored the red flags, among other compliance failings.

At the expense of an “organizational culture that encourages ethical conduct” under OECD, FCPA and U.K. principles for compliance programs, Penn State cultivated an unethical business culture suited to football as a profit center.

They didn't know? Back in 2000, a maintenance worker (among others) did know, but did not report it. He saw suspicious acts by Sandusky in the football shower room. But he was intimidated into silence by fear of retaliation or being “out of line.” A properly operating compliance program has a hot line for anonymous internal reporting that treats employees with respect. The compliant company maintains its “integrity capital” while dispensing “organizational justice” -- a swift, unbiased investigation and remedial action.

Who would have truly benefited from a real compliance system? The children, the silenced victims of Penn State's culture of corrupt indifference and a failed anti-corruption compliance program. Their voices were finally heard at trial.

And that is a another lesson about compliance from the Penn State scandal. Amidst the loud arguments about anti-corruption laws and the lobbying, the jockeying for amendments and for enforcement priorities, a voice is missing: those victims of corruption, without power, money, lawyers, media experts, or lobbyists, who are just trying to have a life, make a living and keep alive their hopes for a better future for their children. It behooves us to listen and to speak for their interests too.

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Michael Scher is a contributing editor of the FCPA Blog.

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