- At Deutsche Telekom responsibility for each of the ten (10) UN Global Compact principles is assigned to individual members on its Board of Directors, including Principle 10: Anti-corruption. By doing so, the company ensures that each of the ten universal principles of responsible business conduct has the strongest possible ambassador to champion its implementation in the company’s business strategy.
(Source: A New Agenda for the Board of Directors, p. 6)
- The German multi-national Siemens had practiced a compliance programme for almost a decade, but its efforts amounted to little more than a “programme on paper”. In 2008, the scandalous news broke out that Siemens paid more than 1.4 billion euros to the German and U.S. authorities to settle corruption charges. Investigation showed that members of the Managing Board had been aware at the time of numerous compliance violations but failed to respond adequately or alert company auditors. Instead, bribery was tolerated and often even rewarded in an environment of tremendous pressure to meet sales goals. As a result, over 4,000 illicit payments were identified totalling over 1.2 billion euros. This case clearly illustrates how a culture of corruption can grow out of control due to silence and absence of a strategy in this field.(Source: The Guardian, BBC, theconversation.com …)
- L’Oreal’s compliance programme is built around a simple code of ethics written in plain language with numerous practical day-to-day examples. To show respect for its employees, the code is available in 45 languages. Employees can learn through online sessions, collective classroom sessions or printed copies. The company also hosts an annual Ethics Day where employees have an opportunity to ask the Chief Executive Officer (CEO) about the code and compliance in general. The event is attended by a large number of employees and the CEO receives thousands of questions.
The Chief Ethics Officer has visited 70 countries and openly talked with employees at all levels and in all types of jobs about the code of ethics.
- In 2017, when the scandal related to the years-long, deeply rooted culture of overt sexism, criminal behaviour of drivers, systemically misleading regulators over unauthorised rides, violations of intellectual property and privacy broke out…, Uber did not have standards of ethical conduct in place, let alone its director being exemplary in this regard. On the contrary. As a consequence of numerous violations of regulations and fundamental business ethics, Uber was banned in some major cities, and investors publicly admonished the unacceptable business practices; numerous employees, including executive directors and the president of the company, had to leave, with the company paying hundreds of millions of dollars in fines and damages. Today, Uber has a code of conduct and a code of ethics for leaders.
(Sources: bbc.com, businessinsider.com, qz.com)
- At Royal Dutch Shell (“Shell”) the bonus remuneration of the five (5) top executives are calculated by a scorecard in which financial results weigh 30%, operational aspects weigh 50%, and sustainability weighs 20%, which as a factor is deliberately separate from the financial performance. In many companies, sustainable development activities include anti-corruption and other forms of compliance and ethical behaviour.
(Source: A New Agenda for the Board of Directors, p. 9)
- In 2016, it was discovered that employees of the retail banking unit of the by then successful and respected bank Wells Fargo opened more than three million savings and current accounts for customers without their knowledge. If a branch office failed to reach its goals, the deficit would be added to the goals for the next day. Employees in branch offices were financially rewarded for reaching their objectives of cross-sale and services for customers, with personal bankers receiving bonuses amounting to between 15 and 20% of their salaries, and commercial staff up to 3%. In order to reach the extreme financial goals, the bank’s employees systematically applied for years a series of unfair and unlawful practices, such as charging disputable costs to credit card users, additional services and insurances.
(Sources: Harvard Business Review – HBR, July-August 2019, gsb.stanford.edu; Yahoo Finance, Wall Street Journal, sec.gov)
As a result of numerous violations by the bank Wells Fargo, more than 5,000 employees were fired, the Chief Executive Officer was dismissed and had to return US$ 41M in received income (clawback clause). The bank paid a total of more than 1 billion dollars in penalties and damages. The price of Wells Fargo stock has since dropped by 13%, which reduced its market capitalisation by around 12 billion dollars.
(Source: Harvard Business Review – HBR, july–august 2019, gsb.stanford.edu; Yahoo Finance, Wall Street Journal, sec.gov)
- The bank Nova KBM d.d. has established an internal awareness-raising programme for values, based on internal ambassadors. Values are also a frequent topic of regular meetings of the president and members of the management board with directors and leaders whose task is to spread the corporate culture within their working teams. The code of conduct and values is described in detail on the website and the organisation also thoughtfully incorporates these values into internal events. Due diligence is carried out before a contract is concluded with a potential contractor or supplier and it is also monitored after the contract is signed. It had already happened that a contractual relationship was not concluded due to compliance concerns.
(Source: Nova KBM, d. d., 2019)
- The Israeli generic drug manufacturer Teva Pharmaceuticals (“Teva”) settled with the US government for penalties and disgorgement amounting to 519 million dollars (about 436 million euros) in 2016, in part for unethical employee and third party conduct. Despite having a compliance programme in place, both local employees and third parties acted improperly. The Russian subsidiary (“Teva Russia”) was able to get an unethical relationship approved by Teva’s regional compliance office simply by deliberately omitting important information in its due diligence report to the regional office. Teva Russia failed to disclose in its due diligence report that the distributor was owned by the wife of a government official, that the government official continued to maintain operational control over the distributor’s activities, and that the director of the company was being investigated in Russia for corruption. This is a case of compliance mechanisms being in place but being manipulated at the local level by employees and third parties. The corporation was ultimately responsible for this.
- The brewery Pivovarna Laško Union has identified specific examples of violations about which employees may express concerns in line with the “Speak Up” rulebook, while using the internal channel of the Heineken corporation, also called “Speak Up”.
- There are various examples of fraud, discrimination and harassment, violations of competition rules, bribery, environmental and security issues, violations of confidentiality, etc. Employees are meanwhile educated on the procedure and manner of reporting, while reports are investigated, and appropriate measures taken. In every case, the person who has reported a violation receives feedback regarding the findings and measures, while untruthful and malicious reports are penalised.
(Source: internal document, 2019)
- In the already described Wells Fargo example, the company fired the asset manager who had reported the systemic use of unfair business practices in client dealings. Subsequently, the authorities rehabilitated the employee and rewarded him with a high monetary award in accordance with US law, proportionate to the penalty that the bank had to pay for the violations it committed.