Whether your organization is building an anti-corruption program from scratch, or improving an existing one, it can be an intimidating, time-consuming and costly process. Either way, thinking about an anti-corruption program strategically and holistically can build efficiencies and effectiveness.
A holistic approach to an anti-corruption program allows leadership to provide strategic direction and to actually understand an anti-corruption program’s overall structure and effectiveness. It also demonstrates to executives and directors why your organization needs an anti-corruption program. It is vital to convey why a business needs an anti-corruption program because most business folks respond to the notion of establishing an anti-corruption program by explaining their organization is good – they don’t bribe.
That may be true but, corruption is insidious and, without a holistic, strategic perspective, it’s hard to appreciate how a business may be at risk for exposure to corruption.
Without a strategic approach, businesses often focus on gifts, meals, and entertainment resulting in business leaders going crazy because they are asked as part of an anti-corruption program to approve requests to give a good customer a mooncake for the Mid-Autumn Festival in China. Or members of your board of directors may wonder why they are getting “reports” about which customers were taken out to dinner in a quarter or reports that simply state the organization uses X number of consultants to sell its products – neither report gives context. Either way, you lose leadership engagement if your anti-corruption program does not context.
A strategic approach also helps assure that different functions in your business follow the same policies and have the same appreciation for the organization’s commitment to avoiding the risk of corruption. For example, your “social responsibility” team may support the state senator’s favorite charity, that his wife runs and pays herself $350,000 a year to do so, by contributing $10,000 to their charity baseball game. Meanwhile, your business development team is denied their request to buy a $30 mooncake for a client. Word will get out about the inconsistencies; and people will not be happy. Unhappy employees often go dark – that is don’t tell you what they have going on or, they don’t follow processes because the processes don’t make sense to them.
A strategic, holistic approach manages the corruption risk in the U.S. and overseas. So many anti-corruption programs myopically focus on the Foreign Corrupt Practices Act while forgetting that interacting with U.S. federal, state and local government officials and employees also expose your business to corruption risks.
Finally, starting an anti-corruption program from scratch or working to improve an anti-corruption program by figuring out where you do business, determining what laws apply, and what policies, or controls you already have – is not really a start, it is to my mind, the second or third step.
Rather – start by figuring out how you interact with governments – that is – how do you go to market, identify your clients, execute your contracts, and get paid. For without this step, you are creating an anti-corruption program that is not tethered to your business. As a result, your employees will figure that the program does address how you actually do business and they will not be inclined to follow it. Your leaders when hearing about the program, will wonder why you are spending time and money on processes that don’t matter.
Once you figure how you interact with the government, then your next step is to identify what laws apply, what processes, policies and controls you have in place, and what you need to do to improve.
Here are some questions to get going on this:
How does your organization obtain or retain business?
- Do you use third parties like sales agents, consultants or others to develop customers?
- Do you use your internal business development or sales team?
- Do you sell to governments? Do your customers sell to governments?
- Regardless of whether you use third parties or your own team to obtain and retain business – exactly how do they do it?
- Does your organization host seminars, trainings, social events to engage with customers or potential customers?
How does your organization identify, recruit and hire talent?
- Do you recruit from governments because your business benefits from having former government officials or government employees working for you?
- Do you get resumes from government officials and government employees because your business is attractive to government folks?
- Do you bring on interns or employees at the recommendation of customers?
- Do you have a program for recruiting from state and local universities and colleges?
Does your organization try to influence policy, participate in the political process, or support a political candidate?
- Do you have a political action committee?
- Do you have internal lobbyists or do you retain outside lobbying support?
- Does your organization have a strong interest in policy or in particular laws and regulations? If so, does it engage in policy debate, policy influence, in influencing laws, regulations?
- Are your leaders active politically as individuals – supporting candidates or causes?
- Does your organization host events to support a candidate or a cause?
How do you comply with laws and regulations?
- What is your process for getting permits? Licenses? Visas?
- Who is responsible for getting permits, licenses, visas?
- How do you interface with governments to get your taxes paid?
How do you respond to government requests for information subpoenas, audits, letters requesting information, representations and certifications?
- Do you have a process for responding?
- Who is responsible for managing the response and for interacting with the government?
Do your employees and leaders regularly socialize with government officials or employees?
- Are any of your employees close friends or family with government officials or employees?
- Are any of your employees themselves a government official or employee?
If you do have government contracts:
- How do you execute the contracts?
- How do you pay the invoices?
- How do you identify expenses for the invoices?
- How do you handle contract disputes?
Are you merging, acquiring, forming joint ventures or other partnerships? If so, how are these organizations involved with governments and how do you find out?
An applicable quote from businessman, philanthropist, and New York Times best-selling author (Swim With the Sharks: Without Being Eaten Alive: Outsell, Outmanage, Outmotivate, and Outnegotiate Your Competition) Harvey Mackay
When an employee asks why the company does things a certain way, and you can explain the logical reason, then the employee knows what she’s doing is valid.
In When the Writ Hits the Fan, I explore these issues – the intersection of law, business, criminal activity and ethics: why do some companies violate the law? what happens when they do? what is ethical? how do we get corporations to follow the law? can lawyers help and, if so, what is the lawyer’s role? Be sure to sign up for the newsletter to follow along!