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Compliance & Risk

To mitigate threats, GCs need to focus on corruption risk as offices reopen

Lori Tripoli  Content Expert / Compliance Learning / Thomson Reuters.

· 5 minute read

Lori Tripoli  Content Expert / Compliance Learning / Thomson Reuters.

· 5 minute read

It can be easy for corruption risk to be put on a back burner as workplaces reopen and organizations get back to business at least partially onsite. A year of slow — or no — growth can pressure everyone from the top down of an organization to focus purely on accounts receivable. But a wise GC would keep a keen eye on corruption risk as elements of a still-dispersed workforce could be tempted to make the wrong choice

Distracted by return-to-work issues and pandemic risks — partial re-openings, vaccination confirmation, temperature checks, the issue of face masks — general counsel (GCs) have a lot on their plates right now as the world segues back to business. There are office lease issues to contend with as organizations downsize their real estate holdings, supply chain problems that in-place contracts may not solve, and an overall shift to the rhythm of a workday that had been disrupted by a 18 months of global upheaval.

Meanwhile, the rank-and-file as well as managers and executives are likely to be feeling pressure to make up for lost time and money given our collective pandemic shutdown or slowdown, depending on what your business happens to be. In short, everyone is both busy and under pressure — and that’s a scenario that might give rise to corruption that could go undetected.

A time for precaution

We have, after all, seen seemingly good people do bad things in previous challenging times. For example, one doesn’t have to dig too deep to find some top-flight entities that got into hot water during the Great Recession and its years-long aftermath. Pressured to make their numbers, even people working for marquee-branded organizations can be swayed by high-net-worth clients and pressure to perform.

With people focusing on the bottom line, red flags can be ignored, compliance might be circumvented, and corrupt behavior can go undetected or willfully disregarded so long as the money keeps coming in. If a GC doesn’t notice it, a regulatory or enforcement agency might — as may plaintiffs’ attorneys who like to file securities fraud class action lawsuits and make allegations about material defects in policies, procedures, and compliance.

At the same time, with many employees still working from home and organizations’ compliance functions having to, in essence, police multiple fronts, more bread-and-butter opportunists may use this moment of lax oversight to do things they shouldn’t. Just this year, the U.S. Securities and Exchange Commission charged a couple with insider trading in a situation where one partner was a product manager at a drug company overseeing a clinical drug trial. After learning of negative results, the partner gave a tip to her companion, who sold his shares. Although the sale pre-dates the pandemic, it’s a good reminder that an uncomfortable bleed of confidential information might be oozing its way outside a company as employees and their companions work within the confines of their home.

Double-down on risk management

As busy as they are, GCs need to greet their organization’s office reopening with increased vigilance regarding risk management. They can be proactive in a number of ways, including:

1. Update policies and procedures to reflect current circumstances

If you want your workforce to follow policies and procedures, revise them so they reflect the new normal. How should things be handled when people are remote and higher-ups are not necessarily immediately accessible?

2. Add training with contemporary elements

Similarly, the training provided to employees shouldn’t be years-old courses that describe a different world. Workers need to know how to comply with policies and procedures in their circumstances now. Make sure the training your organization offers will actually be useful. Let’s not waste anyone’s time pretending that we’re still in the “old normal.”

To that end, given the stress many employees are under, push out frequent micro-trainings and quick and easy reminders: What are bribery and corruption? How might they surface? Where should you report them? How can you avoid them? Just a sentence or two in a daily newsletter can suffice to help keep anti-corruption top of mind. Pose moral dilemmas: Your biggest customer now wants a kickback to keep the company’s business. What would you do? Where would you go for help?

3. Engage with gamification

Gamification can make compliance reminders fun, too. Setting up competitions between internal teams can motivate people to pay more attention to what otherwise may seem repetitive. Similarly, individuals who are given the opportunity to earn scores in trainings will engage more intensely with the content.

4. Appraise compliance performance

As circumstances and labor laws allow, consider adding compliance elements to performance appraisals (thus rewarding compliance as well as results). The reality is that someone who is going down the wrong path, compliance-wise, sees more value in the ends than in the means by which they are achieving them. Make it harder for them to make that decision.

5. Gather and use pertinent data

Would you even know if 10 people on a particular team looked up the anti-bribery and anti-corruption chapter of your organization’s Code of Business Conduct last week? That could be an indicator that something is amiss — and that someone should check on it. Develop that level of fact-gathering ability and make use of it.

Sure, some of these suggestions take time and money that likely are in precious short supply right now. But these proactive measures are meant to forestall hefty legal fees, the distraction of an investigation, and regulators’ fines down the line — GCs would be wise to heed these suggestions.