If the following survey results are any indication, a betting man would be doubling down on increased FCPA cases in 2016.
The study by international law firm Hogan Lovells and reported in the International Business Times highlights that, for over half of multinational companies, fighting bribery and corruption does not feature as a main priority.
The piece reveals that old habits die hard. A focus on short term sales goals, making deadlines/sales quotas and operating in areas where bribery runs rampant contribute to a casual attitude towards maintaining ethical behavior and staying true to internal values and external regulations.
From the report: “Some 40% of compliance teams revealed anti-bribery and corruption is not one of their chief executives’ top priorities, while 39% of CEOs did not openly support anti-bribery and corruption measures within their business.” As ethics advocates, we have observed a lackadaisical attitude towards bribery in certain parts of the globe, however studies have consistently proven that lack of leadership on anti-corruption backfires for Western multinationals. Much of this research is outlined on our corruption research page.
But the question then arises: why should these leaders care? Despite a temporary bounce in stock price, corruption does not pay out over the long haul. Any company leader should be thinking about the longevity of their firm which would make the pro-bribery case as nonsensical as it would be damaging. Cultures of obfuscation, theft and dishonesty result in bankruptcy, insolvency and in some cases, political and economic instability. Anti-corruption efforts, research shows, needs to be embedded at all levels in a company to guarantee sustainable success.
Yet, what sets the Hogan Lovells report apart is that it reveals apathy towards integrity in business practices. The 604 Chief Compliance Officers surveyed admitted their business “adopted a culture of ‘profits over prevention.’” To knowingly operate within a framework that subverts long term sustainability is the height of short-sighted behavior. The adage of an ounce of prevention is worth a pound of cure rings true, and though this was originally an axiom of fire safety the metaphor stands when talking about business. An investment in anti-corruption will put out flames that char reputation, profits, productivity and trust.
In addition, the apathy of certain company leaders also extends to their ineffectiveness in paving collaborative, constructive relationships with their host countries. “Among the businesses surveyed, just 53% of companies have only trained half of their staff or less in anti-bribery and corruption.” Further, “60% of CCOs indicated cultural differences caused a lack of support for anti-bribery and corruption. Despite that, some 28% of companies do not tailor their approach to different markets and 43% do not make anti-bribery and corruption guidelines available in local languages, thus leaving employees to determine what is acceptable based on their personal ethics or local customs.”
For companies to create conditions to fight corruption, they need to be more deliberate in managing their leadership and anti-corruption programs. Without the necessary education, training and culturally aligned strategies, they leave both person and company vulnerable to bad decisions. As we see through research, when people are put into environments where there are no incentives or avenues to behave ethically, it is unsurprising that we see unethical outcomes.
“The biggest challenge for multinational companies is to translate anti-bribery and corruption policies into effective guidance on the ground,” said Crispin Rapinet, global head of investigations, white collar and fraud at Hogan Lovells. This is true but only gets to the one part of the issue. The interaction between external constraints on business, such as FCPA requirements, and the internal structures and policies of firms needs to be at once harmonious and consistent.
Mainly, organizations need to establish cultures of integrity and ethics that motivate employees to think long-term and avoid immediate payouts for incremental gains. This is a winning bet that all companies would be wise to place.
*image courtesy of complianceandethics.org
- Bad Apples, Bad Barrels or Bad Barrel Makers? [blog]
- Corruption [research page]
- Contextual Influences [research page]