FCPA Compliance and Ethics Blog

April 1, 2013

Ethical Behavior in the Navy – Lessons for the Non-Military Compliance Practitioner

What exactly is doing business in an ethical manner? I believe that the answer is different for each company. Ethical behavior can translate into doing business in a manner that does not jeopardize the safety of others and how you treat co-workers and subordinates. One of the things that I think ethical behavior entails is doing business within the rules, regulations and obligations of your business. For US companies doing business internationally, one of things this means is doing business within the parameters of the Foreign Corrupt Practices Act (FCPA).

But what if your business is named the US Navy? A recent article in the New York Times (NYT), entitled Admiral at Center of Inquiry is Censured”, by reporters C. J. Chivers and Thom Shanker explored some of these issues. The article discussed the discipline action taken against “Rear Adm. Charles M. Gaouette, who led Carrier Strike Group Three, which included the aircraft carrier John C. Stennis, had been accused of using profanity in a public setting and making at least two racially insensitive comments, officials familiar with the investigation said.” The article noted that his “case arrived as a worrisomely large number of senior military officers have been investigated or fired for poor judgment, malfeasance, sexual improprieties or sexual violence over the last year.”

Further, the article reported that due to the number of such cases, the new Secretary of Defense, Chuck Hagel, sent out an internal memo to the Pentagon’s top brass, which was also provided to the NYT. In this memo, Hagel “urging a renewed “commitment to values-based ethical conduct.” Further Hagel said that “Each of us must rededicate ourselves to upholding the principles of sound leadership,” and that “Our culture must exemplify both professional excellence and ethical judgment.”

Interestingly, this discipline of Admiral Gaouette, was instituted by a compliant by Navy Captain Ronald Reis, the commander of the Stennis. Reis himself was accused of not following “normal protocols for driving the ship through busy shipping lanes, and ran a bridge in which the surface officers under his command felt tense and unable to offer their input, the officers said. Three officers and two former officers familiar with the ship’s bridge procedures said the captain tended to act alone and by eye, and not carefully track the Stennis’s position relative to other vessels in crowded seas; one of them said he tended “to fly the ship.””

Lastly, the article quoted the former officer for the following “We’re not talking about how Ron worked with the harbor pilot when docking at a pier. We’re talking about how he was driving through congested seas. People were concerned when he was driving because they were concerned he would hit something.”

According to the article, Gaouette was cleared of any criminal violations but was given a “set of administrative penalties which will effectively end his career” in the Navy as “the full inspector-general’s report was ordered to be attached to the admiral’s service record, where it will block his chances at promotion or future command, officials said.”

I recognize that most compliance practitioners do not work for the military but there are some very valuable lessons for the compliance practitioner that can be gleaned from the article.

Ethical Leadership

The few references in the NYT piece to Hagel’s internal memo are quite telling. Like most military organizations, the US Navy relies on strong discipline throughout the ranks. However, this does not mean that a senior officer can act abusively to lesser ranked officers. The article noted that “Navy officials declined to provide details, or discuss precisely what Admiral Gaouette said that Captain Reis and the inspector general deemed insensitive.” Nevertheless, whatever was said would be appear to outside what the Navy believed was tolerable. So intolerable in fact, that it ended Admiral Gaouette’s career.

Treatment of Whistleblower

It was Captain Reis who filed the complaint against Admiral Gaouette, not the other way around. The article reported that “After Admiral Gaouette had ordered the captain to slow down as the vessel was steaming through ship traffic in the Malacca Strait in excess of 20 knots, the officers said, Captain Reis filed a complaint to the inspector general, claiming the admiral was abusive.” The Navy followed through and investigated a senior officer in a situation where it appeared that the junior officer had engaged in conduct where the junior officer did not follow standard Navy protocols. In other words, the Navy did not blame the person who filed the complaint for his actions which may have even led to Admiral Gaouette’s interactions with the Captain.


As noted, the conduct which Admiral Gaouette engaged in was so far out of line or unethical that it ended his Navy career. For any compliance program to work there must be both a carrot and a stick, meaning that violation of a company’s ethical values must be punished. In the Navy, abusing a subordinate is something that violates its standards for ethics based conduct. Nothing speaks more strongly than actions and for the Navy to discipline a senior officer in such a manner speaks directly to its commitment of “upholding the principles of sound leadership” that Hagel spoke about in his internal memo.

I found this article provided many things for the compliance practitioner to think about. It showed the Navy’s commitment to have an organization run with ethics. It may be that your company could learn something from this example.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2013

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