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Thursday
Aug152013

‘Personal sacrifice sets compliance officers apart’

Editor's note: This is the third post in a series dealing with the duties of compliance officers. The first post is here and the second is here.
 
Dear Compliance Officer
 
First, let me confirm your sense of reality. You write that a Compliance Officer who does his job by telling the truth is in danger of retaliation. Instead of getting a bonus for a job well done, he may lose his career.

Is this really true? YES it is true. It’s just not generally acknowledged or discussed.

It happens around the world, even in America, the home of the FCPA.
 
Do you recognize the name Maritza Munich? Not many people do. She was the CO at Wal-Mart who tried to stop the bribery scandal that's still unfolding at the company. She is a “Compliance Hero.”

As head of international compliance, Munich insisted on an investigation of a “campaign of bribery” in Mexico and the top manager who led it. According to ongoing media reports, the top executives of Wal-Mart blocked the investigation. She then “resigned,” while other executives were promoted.

Munich’s career at Wal-Mart was stolen from her. Instead of incentive pay, a bonus, and a stellar career, she lost out on the recognition, respect and financial security she deserved for doing a CO’s job when it mattered most.

What does she think about what happened? We don’t know exactly. According to a Congressional committee, Wal-Mart will not let her tell her story.

However, in a 2012 interview she talked about her personal experience as a CO:

It was easy for me to move, because I knew I could return to the law firm where I had worked …. I am grateful that I had former colleagues whose doors were always open for me to continue to practice my profession. Others may not have that option. You can’t underestimate the stress that difficult situations in our careers inflict on people who have children to support and mortgages.

All COs I know can tell similar “war stories.” A real pro of over 25 years put it this way: “I carried a resignation letter in my pocket and used it three times; twice I was promoted and the third time I quit before I was fired.” Another said he discourages talented young people from the field because the inevitable conflicts with management lead to career suicide.
 
Sundar, a forensic accountant in India, wrote a comment noting that in “the history of prosecutions, there are limited references to compliance officers’ role or perspective.” These are needed to “elevate the role of compliance officers and reflect a professional no-tolerance approach.”
 
Indeed, when you read about FCPA prosecutions, where are the COs? Most companies have a compliance staff. But bribery schemes cannot happen unless the compliance pros are sidelined. Instead of highlighting this crippling of compliance programs, many prosecutions ignore what happens to COs, brushing past the intimidation or reprisals. This should be singled out for attention and prosecuted as one of the worst “corruptions” of a true compliance program.
 
Are the guidelines from international business or compliance organizations any different? COs are lumped in with other employees, not protected for their special work. They are on the front lines fighting corruption every day. Their personal sacrifice makes a difference. Why ignore them?
 
The Executive Director of the Ethics and Compliance Officers Association (ECOA), Keith Darcy, wrote about building more responsible corporations: “We need to ensure that today's guardians -- CO's -- are properly trained, protected and fortified to do their very lonely jobs.”
 
Your letter suggests that COs can help themselves by drafting professional codes of conduct to clarify what is expected of the role. If this is going to help, COs will have to advocate for it.
 
The SCCE (Society of Corporate Compliance Ethics) editors and members graciously wrote to me concerning their 2007 model Code of Professional Ethics for COs. Translated into Chinese and 12 more languages, it is a highly thoughtful, important guide to many of these issues. It deserves wide circulation that could be a starting point for COs who want to write a code in their country.
 
I hope powerful organizations, like Transparency International and the OECD, will urgently recognize, protect and endorse COs who are trying to create professional codes, often under very difficult circumstances. Transparency International advises that ideas concerning the special situation of COs are invited for consideration for TI’s new commentary on business standards. (Emails go to: scotefreeman@transparency.org)
 
Until times change, however, we are in agreement: A CO working in a situation like the one that evidentally existed at Wal-Mart still faces the lonely choice to “stay or go.”  Stay and be an unsung Compliance Hero. Or leave to find a safer career. How should a CO decide?
 
I will address these points in the next posts. If you are a CO around the globe, I hope I am speaking your language. These are just my opinions. I am interested in yours.

Thank you for joining this discussion by leaving comments below or by writing to me or to the FCPA Blog.

______________

Michael Scher is a contributing editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney. His work for major companies in New York and the Middle East includes military procurements, international trade contracting, supervision of national sales forces and trainings for compliance with related laws, like the FCPA or AML. Miami-based, he assists companies in trainings and work shops and FCPA-related projects or investigations. In addition to English, he speaks French and Hebrew. Contact him here.

Reader Comments (2)

Michael,

Thank you for this series of posts.

At the end of this post you suggest that COs may be confonted with the following two choices:

"Stay and be an unsung Compliance Hero. Or leave to find a safer career."

In the situation where a CO has escalated the matter all the way up the corporate hierarchy and found that management is still unwilling to change course and avert a violation, then i would suggest that the choice would more appropriately be stated as follows:

"Stay and be part of the problem (and potentially face criminal liability). Leave and hope to find another position."

In other words, a CO needs to be prepared to resign if the Company's management refuses to change course.

A third choice could be to stay and continue to insist that the company change course. This may result in various forms of retaliation, including perhaps termination.

Whether CO, as an employee of a U.S. issuer's foreign subsidiary, will qualify for protection as a whistleblower under Dodd Frank is still being adjudicated in several cases. It is not surprising that this issue is being closely watched by compliance officers outside of the US including the one to whom your excellent post was addressed.

I would suggest that there is only one wrong choice for.a CO: do not stay and become part of the problem.

As to the remaining choices, the best choice will depend on a number of factors including the CO's personal circumstances and level of tolerance for withstanding difficulty and stress.

No matter which choice the CO makes, the CO may, under certain circumstances, report the violation to the SEC to qualify for an award under Dodd Frank. Becoming a whistleblower is never an easy choice. Someday, you may be recognized as an Unsung Compliance Hero. But it could be many years before you receive any recognition as such.

I am available to help counsel any individuals who may be facing these difficult issues.
August 16, 2013 | Unregistered CommenterMatthew J. McGinn
Hi to Matthew and other readers who commented on the post before this one -

If you like, please send me an email so I can be in touch? I do not otherwise have a means to connect. My email is: michael75we@gmail.com.

It is a pleasure to read these comments and I am grateful for it. I will answer or elaborate on them in a post soon.

The most important point is to begin to break the silence by COs and to supply the voice missing from FCPA discussions. Advocacy by COs can change many things over time.

I have received notes from COs who relate personally to the dilemma of the CO as Compliance Hero. If you know COs in this position, they are not alone. That is a start. Many thanks for this discussion.
August 16, 2013 | Unregistered CommenterMichael Scher
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