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Monday
Dec032018

Compliance ‘interventions’ shouldn't be creepy

If we could know in advance what a potentially corrupt team inside a company would look like, we could prevent the corruption from happening, at least in theory. It turns out we do know what corrupt teams look like. Alison Taylor has done that work for us.

She researched the academic literature. Then she interviewed "23 prominent lawyers, investigators, scholars, and policymakers with firsthand knowledge of the inner workings of dozens of corrupt firms."

She distilled her findings in a 2016 article for a Columbia Law School publication. In it she identified the "cultural traits of organizational corruption."

The archetypal corrupt team, she said,

. . . is based far from headquarters, under a secretive but domineering leader. The team is widely regarded as successful and high-performing, but guards information and avoids scrutiny. Team members are fiercely loyal to each other and driven by a sense of urgency, insecurity, competition, and short time horizons.

What's the fix?

"Ultimately,” Alison said, “changes in organizational culture require interventions into teams that exhibit the above characteristics."

Alison left her readers to ponder what "interventions" might work. So let's do that.

Suppose a chief compliance officer spots one of Alison's "archetypal corrupt teams." It’s a long way from HQ, its leader is strong, protective, and secretive. Among team members loyalty is extreme. And above all, the team brings in piles of money.

Here's the problem for the CCO. In a for-profit organization, a team's financial success becomes its protection. High performance insulates the team from outside forces that want to change it. The C-suite naturally wants to preserve and nurture any team that becomes a cash cow.

The chief compliance officer shouldn’t try to break up the team. Outside threats to the team’s continuity will trigger a defensive response from the C-suite. A CCO trying to break up a profitable remote team could end up on the sidewalk.

Remember. The team isn't corrupt yet. It's only potentially corrupt. So any intrusive intervention at this point would look weird — arbitrary, punitive, and  . . . . creepy. Minority Report-ish.

Is there another option? Yes, a “soft” intervention.

Some extra compliance education and training for the team would be healthy and should be welcome. Maybe the CEO could pay a visit to the team and talk about the company's values and why they're important. How about bringing the team back to HQ for the training and CEO talk? That would be even better.

The CCO might also propose to the C-suite some targeted higher-level data analytics. Then there'd be an early warning about odd payment patterns or red-flag relationships, and so on. A data analytics intervention doesn't need to be intrusive or threatening.

But any response to one of Alison's "archetypal corrupt teams" before actual corruption happens should be subtle not drastic, thoughtful not creepy. Otherwise it won't work and could backfire on the CCO.

As a final thought, it's not just compliance officers who should read Alison's article. Having a board and C-suite familiar with the traits common to corrupt teams could open the door to truly preventive compliance.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.