Tuesday, November 5, 2013

Are Ethics & Compliance sidelined?


My awareness is confined to big, publicized cases of alleged corporate wrongdoing, plus other legal cases I learn about.  I am not privy to the nuts and bolts of ethics and compliance programs carried out in corporations, or their observed effects on employee and corporate conduct, where such are not reported or reflected in the publicized news and other legal cases.

My contention that Ethics & Compliance are sidelined is limited to what I observe where I have information, and circumspection is needed about drawing any conclusions about the effect of corporate ethics and compliance programs in corporate and employee conduct in areas outside my realm of observation.

What is the sidelining of Ethics & Compliance

I contend that Ethics and Compliance are sidelined relative to big, publicized cases of alleged corporate wrongdoing and other legal cases I know about.

Ethics & Compliance are sidelined in these places, because there is avoidance of  determinations of whether there is in fact corporate wrongdoing and of what the particular actions of corporate officers and employees are that are wrongful. The main role of Ethics & Compliance is to promote ethical and compliant conduct by corporations and their officers and employees.  If no bother is taken to establish what is in fact wrongful and what is not wrongful, Ethics & Compliance are deprived their mainstay that they need to be able to say what is right and what is wrong under their ethics and compliance programs.  Unable to say what is right and wrong under their ethics and compliance programs, Ethics & Compliance are further impaired that they cannot bring to bear such tools as they may have under their programs to promote right conduct and inhibit wrong conduct.

What are the contributing causes to the foreging

There are several contibuting causes to why there is avoidance of  determinations of whether there is in fact corporate wrongdoing and of what the particular actions of corporate officers and employees are that are wrongful.

First, there is great complexity in corporate conduct and there are large numbers of officers, employees and other actors who play a role in particular corporate conduct.  Black and white can frequently be hard to see, and much is grey.

Given the complexity, it can be very time comsuming and expensive to ferret out such information and facts to allow for determinations  about what is wrongful or not wrongful in corporate and employee conduct.

Some of the important actors have personal interests that are better served if less bother is given to making determinations of whether wrongdoing has in fact taken place and of what particular actions of officers and employees are that consitute wrongdoing.

Plaintiffs' lawyers are masters at forcing defendants into making payments without determinations of wrongdoing, and it is in the interest of plaintiffs' lawyers to keep that system going and to avoid a system in which there are actually made determinations of corporate wrongdoing and the particular actions of officers and employees that are wrongful.

Management of corporations is willing to go along with the plaintiffs' lawyers because the payments in question are not coming out of their own pockets but out of the pockets of stockholders.  Also, if determinations of actual wrongdoing were pressed for, that might lead to more attention being paid to making determinations of what particular actions of officers and employees comprised the wrongdoing, and this, in turn, might lead to greater individual accountability and liability for corporate wrongdoing.  Management has a personal interest in avoiding the latter.

Government prosecutors, regulators and attorneys general have political agendas and power grabs that can frequently be better served by avoiding having to make determinations of actual wrongdoing .

Diversion of corporate resources

A good case can be made that there is a significant waste of corporate resources associated with the foregoing, which Ethics & Compliance could contend would be better utilized by Ethics & Compliance in trying to carry out their missions.

Undermining of standing of Ethics & Compliance

If Ethics & Compliance are sidelined as described above relative to big, publicized cases of alleged corporate wrongdoing and relative other legal cases, the standing and authority of Ethics & Compliance may be undermined in the eyes of employees in the regular course of Ethics & Compliance implementing corporate programs.

Ethics & Compliance have not fought back

If Ethics & Compliance have been sidelined as described above, Ethics & Compliance have done little to try to assert themselves in the matter.

I have, for more than five years, been urging Ethics & Compliance to consider the substantial failure in there being determinations of what is and is not corporate wrongdoing and what particular conduct by officers and employees is wrongful, whether and how that failure affects Ethics & Compliance in carrying out their mission, and, if it is concluded that there is an adverse effect, whether Ethics & Compliance should endeavor to advance a position to change the situation.  For more than five years, Ethics & Compliance has evidenced no interest in this.

It is acknowledged that Ethics & Compliance is under corporate management, and that may be an explanation of why Ethics & Compliance has expressed no interest, because management does not want Ethics & Compliance to take this matter up.

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