A leading expert on business ethics, Richard Bistrong is the founder and CEO of Front-Line Anti-Bribery LLC. After spending the first decade of his career as an international sales VP, his career took a turn when he pleaded guilty to violating the FCPA and served 14.5 months in prison. His valuable assistance as an international law enforcement cooperator paved the way for a transition into full time work in anti-corruption efforts. With his unique perspective, he is now an award-winning consultant, writer and speaker on current front-line anti-bribery and compliance issues for businesses and organizations around the world.

Richard will be leading an instructive and eye-opening discussion on how to mitigate one of the uglier aspects on international business at Your Future in Global Markets on October 4^th – bribery and corruption. As one of the world’s leading compliance experts with a truly unique perspective on these issues, we’ve asked him how companies can do better to protect their people and their organizations from corruption.

Listen to the full interview here:

Richard Bistrong – The gaps in your compliance program and how to fill them

You have a unique perspective when it comes to corruption and compliance efforts. What has that taught you about corruption in international business, and how to identify and mitigate it?

Well, Pamela, thank you for the question, and thank you for the opportunity to chat a little bit today. Firstly, people who work on the front lines of international business like I did are far away from home, working in remote offices or even from their hotel rooms, and often thinly supervised. And this is what my experience as a 10 year international sales vice president taught me the hard way, and what some of the challenges are today:

When it comes to anti-corruption compliance efforts and ethics programs, they don’t always make sense on the front lines of international business, particularly where local cultures might appear to conflict with the rules.

Think about the environment in which people work today – who are they talking to on a daily or weekly or quarterly basis? They are talking to their supervisor or their regional manager, and they are talking mostly about commercial objectives. They’re talking about business success, meeting their quota, their forecast and their bonus plan. So those are the conversations that you’ll find most among a commercial workforce. So how does a compliance program, or an ethics initiative make sense as a partner to those tasks at hand?

I think for people who are in the home offices or well-staffed and supervised regional offices, compliance doesn’t look that complex. What are the problems here, what’s not understood? But, for those who are forward-based, working in the field, compliance might not look so simple. The program might appear to have gaps, be contradictory. Maybe the compliance program and those messages seem to conflict with the unspoken messages of incentive systems. So I always ask from the field perspective, do anti-bribery compliance programs just look like a business partner to success? And are they geared and calibrated to the tasks at hand?

Corruption’s ‘Perfect Storm’

Can you tell us more about how international business people find themselves in the position to rationalize bribery? What is the “perfect storm” for corruption?

I didn’t ever wake up in the morning and say, “how am I going to violate the FCPA today, or how am I going to violate international bribery conventions?”

People are out there in the field thinking “how do I execute on my commercial objectives?” There are some very strong winds that can tip people in the wrong direction.

I’ll talk about a few of these in my session at Your Future in Global Markets.

Corrupt conversations are typically camouflaged using many interesting and colourful words from ‘taking care of people’ to ‘paying tolls’. Recently there was a leader at the World Bank who said he heard of a situation where the farm bribes were referred to as ‘sunshine payments’ or ‘chocolates’.

These conversations and these colourful words used to describe bribery are happening all over the world, often in remote regions, where people aren’t thinking they are within the earshot of international law enforcement or their company’s compliance programs. So the first rationalization is often, “I won’t get caught”. For those that are interested in social psychology theory, they call that optimism bias.

On the other side of that storm, are people who might not jaywalk when they’re back home, who are good, honest hard-working people. I’m often asked “When you were basically breaking the law, conspiring to bribe people for a decade, did you ever lose any sleep over it?” This is still tough to talk about, but I did it because I was ethically numb to the consequences and implications of my decisions. I wasn’t spending my nights on the Transparency International website. I wasn’t thinking about how bribery and corruption robs whole societies of governance, of human rights, of social and economic development. I wasn’t thinking about the consequences to my employer, and regrettably, not to myself and my family.

What was I thinking about?

I was thinking “who’s losing here?” I was in the defense business, and I wasn’t pulling layers out of a bullet-proof vest. The end-user was always getting a world class product. Maybe the company would have to hire workers to manufacture the order, creating more jobs. The company is happy.

They make the sale, I get my quota, my forecast, my bonus, the intermediary moves on to the next sale, and the public official who, in many parts of the world are paid at poverty wages, get a little something to make ends meet. So from the field perspective, as difficult as it is to say this, I looked at it as a win-win. Who’s getting hurt here?

There’s a wonderful book called Sidetracked by Professor Francesca Gino at Harvard, and she wrote a really interesting paper that talks about how, when we think our unethical actions benefit others, we come to think of them as morally acceptable and maybe even altruistic. So for me, over those 10 years traveling from nice business class lounges, hotels and restaurants, I wasn’t thinking about the wider consequences of my behaviour. And I certainly wasn’t thinking about the consequences when I looked at my incentive programs, which were very heavily geared to a win above all else. In many parts of the world I thought of my commercial success as a zero sum game to executing on my FCPA training. I thought,

What does my management really want? All of this FCPA paperwork I’ve signed, or success? Because where I’m sitting, I can’t deliver both.

So those are a few things professionals on the front lines of international business encounter. But just to make this clear – this isn’t an exercise in ethical spinning. I wasn’t forced to break the law. I didn’t need to bribe to be successful. And while I shared these rationalizations and justifications, it’s in no attempt to deflect responsibility on other people or other organizations. I wasn’t a fall guy. There’s only one person who was responsible for Richard Bistrong going to prison and that’s Richard Bistrong, and I paid the consequences for that.

I think that’s all really relatable, which is what’s so interesting about your story and why it’s so important to hear from people with your perspective,  people who have been under pressure, and faced opportunities to cross a line. It provides a lot of insights into what the challenges are and why you can’t just say “here are the rules, don’t break the rules,” and everything just goes smoothly from there.

Let’s remember these multi-nationals and the people who write these compliance programs, they’re living and working in what we call the ‘green zone’.  But the people who are responsible for executing on commercial objectives are often working in the ‘red zone’. We should consider what this all looks like from their perspective.

Creating an environment for ‘courageous conversations’

What are some things that organizations of all sizes can do to mitigate corruption within their organization?

In other words, how can a corporation insure that the front line international business teams are highly successful and rewarded both individually and corporately while embracing an anti-bribery program and ethic? – Richard Bistrong, FCPA Blog

The first thing to look at with any compliance program, is what’s happening in the world right now. We always have change in our external environment  – for example, countries like Brazil are going through dramatic societal change. This is not an issue that’s fixed, it’s ever evolving and compliance programs need to evolve with it. This means that every program is going to have gaps. It’s going to have weak points. And that’s the whole goal, discovering what compliance leaders can do to lean in, and listen to get to what they don’t know. If you want to try to mitigate risk, who knows how to do that better than the people who are working in the middle of it? So, what successful compliance leader will do is say,

Even with a well-intentioned program, we might get it wrong, there might be a gap.  And no one would see that quicker than the people that are in the field. So where there’s a problem, come talk to us about it. Let’s unpack that together.

If you think that your incentive system and your forecast is drowning out the voice of compliance you need to be able to recognize that and act on that. You don’t want your front line staff trying to figure out what the company really wants. You don’t want them to try to untangle what they think are conflicts between commercial objectives and compliance, you want them to talk to you about it as the compliance leader.

You want your employees to hear “don’t assume anything, and let’s unpack those challenges together. Because if we do it together, we’re going to help you, we’re going to fix that problem. We’re not going to put you back in the field where it’s unresolved. Just don’t make that decision on your own.”

And I think when compliance leaders can show that, for lack of a better word, humility or humanity, it’s really encouraging the workforce to speak up when they do think there’s a problem or a conflict. When you have ambassadors, where compliance leaders feel like they are the champion for the commercial workforce, and people in the commercial workforce think of themselves as compliance ambassadors as well, those weak points are always getting mitigated and they’re always getting raised up and addressed. From a communications standpoint that is critical.

Is it important to empower potential whistleblowers within an organization? Are organizations doing this successfully today?

Let’s talk about whistleblowing in a wider sense. It takes a village to deliver international goods or services. Think about all the people involved. You have sales order processing, people in logistics, accounts receivable and finance, and people who are wide and deep in the org. chart.

I always like to ask, do these people – no matter where they are – feel like they are a part of the ethics and compliance team? If someone gets a piece of paperwork, even if it’s from their supervisor, and something doesn’t look right do they feel empowered to hit the pause button and to speak up about this? Or do they feel like they’re just a small gear in a large machine, and “who am I to make issue of this”?

It’s about more than just whistleblowing, it’s courageous conversations. Being able to talk about problems where you see them.

Some recent surveys have demonstrated that people down in the org. chart don’t feel like they’re compliance ambassadors – but they are such a wonderful ethics and compliance resource.

Compliance leaders really need to think holistically about all the people who might touch international goods and services when they think about their anti-bribery and compliance efforts, just like they need to encourage people in the commercial workforce to speak up when they see an issue. Even to the point when they can say, “You know what? If you do speak up and you hear that we’re upset, that actually means that it’s a good conversation, because you’re sharing something with us and we’re fixing a problem together.”

I think companies have a long way to go to really be encouraging that in a wider sense than just whistleblowing.

It sounds like that would have to originate from and really permeate the entire company culture.

That’s exactly right. It has to go wide and it has to go deep to people within an organization who are all working for the same company, but they’re not necessarily on the same team organizationally. They’re in different divisions. It has to span support functions.

What resources are out there that can help organizations of all sizes set up successful compliance programs?

There are so many of them. There’s a proliferation of publicly sourced material out there, including videos and compliance organizations offering programs and certifications. I don’t think there’s any single source of information, but in a way that’s a good thing because there’s so much data and thought leadership out there that it’s a little bit overwhelming right now.

So compliance leaders really need to focus on where they think their program needs a little bit of support, and then to do the online searches and ask within their networks to find out what the best sources of that information might be.

And really take advantage of those on the front-line within their organization.

That’s the wonderful part about how much the whole compliance field has evolved right now. There’s really some wonderful, incredible thought leadership. And it’s one of the things I love about the work that I do now. It’s anything but static. It’s changing and it’s getting richer and deeper year after year.

Richard, thank you so much for taking the time to chat with me about this. It’s so great to hear from people who have different perspectives on this, who have been involved on the front lines and are watching compliance issues evolve and giving people and organizations the tools to tackle often complicated issues. We are really looking forward to hearing you talk about these issues and others at Your Future in Global Markets October 4^th!

It’s a pleasure, and our panel is going to be really interesting. We’ve got Kristine Robidoux who has extensive experience as both in-house and external counsel and has had involvement in some really interesting anti-bribery cases in Canada. And we’ve got Sgt Pat Poitevin from the RCMP with the enforcement perspective, and we’ve got my perspective. So I think we’re going to have a lot of different perspectives on this issue up in the National Capital Region, and I am super excited to see you up there!

The post How to protect your organization from the “Perfect Storm” of corruption – A Q&A with FCPA expert Richard Bistrong appeared first on Trade Ready.

The value of having an organisational whistleblowing process

Recently, whilst lecturing to business and economics students at University of Surrey, I tested their knowledge and recognition of worldwide whistleblowers. Interestingly, but unsurprisingly, most of them recognized Edward Snowden, less so Julian Assange. None of the students recognized or knew any of the remaining twenty whistleblowers projected onto the screen.

Why is this relevant?  The way that individuals frame whistleblowers is significant to how organisations and broader society engage with the topic of whistleblowing.  In my experience, the prevalence of focusing and reporting predominantly on whistleblowers such as Snowden, Manning and the leaker Assange has resulted in organisations kicking the issue of whistleblowing to the curb.

Fewer than one in 10 corporations polled around the world (7.1%) said that whistleblowing was a priority for their organisation in 2015, and even fewer (6.5%) said it was a current priority. Whistleblowing has become an emotionally charged hot potato, with a resulting reluctance to engage with it.

But there’s something worse than a hot potato.  It’s the fire that rages when a whistleblower elects to speak out publicly. If penalties and fines are not bad enough, there is often a large and immediate drop in stock prices, financial performance suffers for years thereafter, and executives are shunned.  There is also a serious liability risk for company boards and management.

The biggest loss, however, is reputational. Attempts to ‘manage the truth’ through PR, communications or specialists typically fails, and people immediately see the deception.

Are corporate leaders burying their heads in the sand?

Investigations into corporations – and sanctions against them – have increased dramatically in recent years. Global antitrust fines in seven key jurisdictions in 2015 (including the U.S., EU, Japan, Brazil and South Africa) surpassed $4.2 billion – a 10% rise over 2012. In the U.S. and UK, companies in certain regulated sectors, such as financial services, are now required to have whistleblowing policies.

A robust whistleblowing policy and process can help insulate a company from criminal sanctions. It gives the business the opportunity to investigate wrongdoing internally and deal with it properly before the regulators get involved. If a company is charged with a corporate offence, it can make the defence that it had adequate procedures in place.

However, if a company has a non-existent, outdated, or inadequately communicated internal whistleblowing process, the laws are on the side of the whistleblower. This is especially true if they disclose externally, opening the company up to corporate criminal charges.

Why do whistleblowers speak out publicly?

The most common reason a whistleblower will disclose externally is an inadequate and weak internal process. In these cases, a whistleblower often won’t have an existing or well-known internal whistleblowing process to follow, and will have observed that previous internal disclosures have resulted in retaliation and/or job losses.

Research by PCAW in the UK show that many whistleblowers (44%) raise a concern only once, and a further 39% will only go on to raise their concern a second time. The overwhelming majority (83%) will only try internal options once or twice and then give up. There is therefore a small window of opportunity to address wrongdoing internally.

Regulators and policy-makers are homing in on the important link between a good corporate culture and ethical corporate conduct. A robust, independent whistleblowing process that makes employees feel comfortable about reporting wrongdoing is a critical asset in building a positive, ethical culture that supports strong corporate outcomes.

However, the challenge for many organisations is that there is currently little evidence-based information to guide them in developing best practice whistleblowing processes. Therefore companies are largely dependent on guesswork to develop a process that will actually work and which will have the confidence of staff, management and the board alike.

Attention needs to turn to what new legal and governance standards must contain to best support internal, regulatory and public whistleblowing. This is a necessary first step in changing the mindset that whistleblowers are destined to suffer, no matter what.

My 14 step roadmap to building and managing an internal whistleblowing process:

Most employees ensure they understand their rights, such as leave entitlements, benefits and pay. However, it is also essential for employees to recognise whether the whistleblower protection system in place applies to them, and if so to what extent.

Individuals who disclose often do not recognise themselves as whistleblowers, attributing their actions of detecting and disclosing information as falling within the scope of their workplace duties and responsibilities. It’s therefore important for employees to know how the internal whistleblowing policy and process has been invoked in the organisation. Here are the most important steps to remember:

1. Encourage the raising of concerns.
2. Maintain the confidentiality or anonymity of the whistleblower (unless explicitly waived by the whistleblower).
3. Ensure thorough and timely investigations of whistleblowers’ disclosures.
4. Manage whistleblowers’ expectations.
5. Keep the whistleblower in the loop of the investigation, from beginning to conclusion.
6. Produce accessible annual reports recording the number of disclosures, steps taken and remedial action taken.
7. Have enforceable mechanisms requiring an investigation into a whistleblower’s retaliation complaints within strict, short time frames (including a process for disciplining those who retaliate against them).
8. Have enforceable mechanisms in place to restore whistleblowers who faced retaliation to their previous positions and statuses within strict, short time frames.
9. Communicate that employees do not have to follow the internal chain of command.
10. Clarify the difference between major misconduct (illegal), employee concerns (illegitimate – bullying, discrimination) and pro-organisational input. All are significant when ‘joining the dots’. Build filters and categories into the whistleblowing process. See the Whispli mechanism as an example.
11. Ensure the process allows the organisation’s own employees (including self-employed workers, trainees and volunteers) in addition to suppliers and customers, to make internal reports of concerns of wrongdoing or irregularities.
12. Ensure that the circumstances in which an external report may be submitted are made clear.
13. Regularly promote the process in clear and understandable terms.
14. Regularly evaluate the reporting process and internal approach to dealing with disclosures.

Appreciate that relying on a whistleblower to disclose misconduct requires a courageous behaviour which is not innate.  With this in mind:

Keep the process alive

• Communicate the reporting process on the organisation’s intranet and on its website, but also ensure middle managers communicate the process in face-to-face meetings. Employees are more likely to listen and discuss compliance and ethical issues within their own groups.
• Focus on positive action – publish stories about demonstrated ethical behaviours to clarify corporate expectations beyond adherence to rules and regulations. For example, how the company reinstated an employee who was unjustly fired by a manager for blowing the whistle or speaking out.
• Build acknowledgement for speaking up into the measure for performance appraisals, reward accordingly and make it public.
• Break down whistleblowing challenges into real-life decision points – as opposed to detailing generic reporting protocols.
• Personalise the process by providing the names of individuals involved in the whistleblowing process, not just their roles or positions. You’re asking people to behave outside social norms, so make it easy. Humanise it.
• Provide training that focuses on what to do, rather than what not to do.
• Brand and promote the importance of whistleblowing separately – do not mix this up with other messages.
• Address employee attitudes and underlying concerns toward whistleblowing and how reports are handled, instead of increasing process awareness only.

A whistleblowing process forms part of an open culture. A whistleblowing process is more than just adopting regulations for reporting; it is driven by behaviour, requiring continuous training.

In some circumstances, a culture of anxiety itself can qualify as wrongdoing that affects the public interest; certainly if it involves serious mismanagement, or the systematic intimidation of employees. The management of the organisation can either be the driving force behind a culture of anxiety, or a contributor by turning a blind eye to it.

Alternatively, an organisation’s management can promote an open culture by valuing and respecting critical and courageous conversations between management and employees, from the top of the organisation right down to its lowest ranks.

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