PROGRESS, NOT PERFECTION

In November 1991 the US Sentencing Commission issued Chapter 8 of the federal sentencing guidelines, which raised two new risks regarding crimes in the workplace: (i) a personal threat; and (ii) a corporate threat. The personal threat said that executives could be subject to civil and/or criminal charges if an employee of theirs committed a crime in the workplace. Whether they know about or participate in the crime is irrelevant. Wilful blindness is not a defence. And in such instances, the corporate threat could impose mandatory fines up to $290m (a threshold long since pierced). However, the Commission did something very creative, offering that the existence of an effective ethics and compliance program can reduce, mitigate or eliminate those risks. Thus the ethics profession was born.

In early 2010, the OECD Working Group issued its Good Practice Guidance that essentially adopted the US federal sentencing guidelines for 45 signatory nations. This has become the global standard for corporations regarding the prevention and detection of criminal activity, and for reputation risk management. Even today, emerging market multinational corporations are adopting similar internal safeguards to protect against corruption and malfeasance.

Despite considerable progress in addressing both internal and external organisational risks, there’s no shortage of malfeasance that threaten corporate reputations. The stunning growth of social media, mobile technologies, and ‘big data’, along with the rapid rise of micro-bloggers and public and in-house helplines, have ushered in an era of transparency that is unprecedented, exposing illegal transactions and raising profound new ethical questions in the way business is conducted. Quite simply, in an age of information there are no secrets anymore, and no place to hide. These new technologies are also driving hactivism, thus blurring the lines between research, due diligence, espionage and privacy issues.

Oct-Dec 2013 Issue

Ethics & Compliance Officer Association