Joost Wiebenga, Deputy General Counsel & Chief Compliance Counsel EMEA for Tyco International, shares his strategy for anti-corruption practices and perception of the challenges facing Chief Compliance Officers in the near future, with Lindsay Lovell from IQPC.
The ABC strategy for corporate compliance
Due-diligence throughout the supply chain sounds a daunting task. In addition to enforcing ethical business externally, Tyco promotes its ethical values internally; to ensure complete ‘tone’ inside and out. When asked what strategies Chief Compliance Officers can implement to ensure effective oversight and implementation, Wiebenga reveals on a personal note his ABC of anti-corruption, which he developed and researched at University.
A = The Agency Principal Relationship “Know your customer, know your suppliers, know your partners; by due diligence, by reputation, by checks – it is one of the most important things, it sounds obvious but it is important. This should go beyond the paper files and check-the-box exercises. In the end the only things that eventually count are the real facts and the real relationship, i.e. substance over form,” said Wiebenga.
B = Behaviour is the necessity to create a corporate culture of compliance, something Wiebenga believes is a common threat for multi-national companies. Tyco has tone at the top, with a board that is absolutely committed to ethical business, but Wiebenga argues that you also need tone in the middle and lower. “It’s not difficult to get the top convinced, now you have to convince the managers at the middle level who have done business for 30 years in the same way and think it was successful,” he said. Tyco uses continuous and proactive training, including reflection workgroups where employees go through cases and talk openly about the issues and dilemma’s in different structures.
C = Controls (Internal) is the control environment – ensuring the company has the appropriate checks, balances, documentation and lines of defence in place. Wiebenga also differentiates between soft and hard controls, the (hard) controls being the ‘C’ and soft controls representing the ‘B’ (behaviour aspects). Wiebenga believes that soft controls are still vastly underrated: “A lot of companies still put a lot of emphasis on results, bonuses and financial targets. However, more companies are now making sure the correct ethical environment is also a standard, and appreciated as part of your incentives. I think that is more and more becoming an important issue for multi-national companies. It’s also a matter of accountability, not only for those in the field but also up to an executive level. It’s not only in word but also in mind and in heart”.
Compliance as a competitive strategy
Prevention is better than cure. Most companies with stringent compliance polices are those that have been fined and penalised, and Tyco is no exception. Multi-national corporations in particular should be proactive on the issue of compliance or accept that they will slip up sooner or later. Companies that realise this are therefore adopting ethical procedures and fighting against corruption.
The first motivation to do so is to protect the company. Engaging in unethical procedures can lead to criminal behaviour, and ultimately result in fines, imprisonment, disgorgement of profits, loss of business and will seriously affect a corporations reputation, credibility and market value.
The second motivation is to remain best in class as a corporate citizen. Wiebenga comments on the recent recession, which has put more emphasis on the importance of the stakeholder: “There’s a changing environment where people look at what the company is doing for the shareholders, the community and the employees. Employees are also more inspired to go to a company with a high reputation”. Furthermore, at a time when compliance procedures are still slow on the uptake, pioneering a compliant culture will give you a competitive advantage in the market place and position you as a leader in the area.
The third and final motivation is of course from a personal desire to operate in a way that does not harm or disadvantage others. As his Ethics Professional once mentioned: “While we take high values and norms for granted at home, at school and in our community why would we use different values and standards when doing business, particularly in poor emerging markets with highly underpaid civil servants prone to corruption?”
Wiebenga concludes the conversation with a clear no-brainer as to why companies need to start putting in place procedures against bribery, anti-corruption and other unethical practises: “In the end, it’s the debate between the short term and the long term. If you only think in quarters then you may be tempted not to think it’s important, but if you remember that a corporation is also based on continuity and shareholder value, there’s no choice than just to do it”.
Interview by Lindsay Lovell, IQPC. First published on Legal IQ.