Memorial Day – A Big Thank You

Today’s is a personal blog. Today is Memorial Day. It is traditionally the day we celebrate the men and women who have gave their lives in service of country in our armed forces. One of the things that I have long rued was the manner in which returning veterans were treated when they came home from Vietnam, no parades, no congratulations, no thank you for serving. In my mind one of the best things to come out of the first Gulf War was the change in how our returning veterans were treated. When they first landed on American soil, at Bangor, Maine, cheering crowds were there to greet them. I find this to be right and proper.

But as I said today is personal. I want to especially honor the men and women who served our country in World War II both those who made the ultimate sacrifice, those you have died since and those still with us on this Memorial Day. I certainly view them as “the greatest generation” for a whole host of reasons, not in the least their collective fight against the forces of evil in the world. Name any right you hold sacred as an American and the men and women of that era fought to defend it. Right to vote, freedom of expression, freedom of religion, are but a few. However, there are many other rights that might you might not think of that we owe to these men and women who fought and sacrificed for us during this conflict.

My father served in that conflict. He is still alive and kicking today at 88. For the past 40 years he has been a labor arbitrator. He believes that working people should have due process regarding their jobs and as an arbitrator he has put that belief into practice by requiring companies who terminate employees to follow the due process requirements of termination for just cause. Put another way, if an employer is going to deliver a death penalty sanction in the workplace, in the form of job termination, it must do so fairly and justly. This does not prevent management from exercising its rights or prevent management from running its business. At a bare minimum, it means that a company must have an agreed upon disciplinary process in place and that process must be followed if the company is going to terminate an employee. A company must investigate and it must allow an employee to tell his or her side of the story, the employee must have the right for union or other representation in the process and the final appeal of any termination must be made by someone other than the original decision maker. In other words, the fair process doctrine. It is one of the rights which the greatest generation defended in that conflict.

So on this Memorial Day, I honor my father and all of the other ever-dwindling number of World War II veterans for their part in making this country the greatest country in the world. I would ask each of you to honor our veterans on Memorial Day in your own way, even if it is just a moment to reflect on those who made the ultimate sacrifice in giving their lives or those who raised their right hands and swore to protect the rest of us.

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, 2015

An Event That Changed the World and Fostering Compliance Leadership – Part II

Yesterday, I used the assassination of Archduke Ferdinand and its continuing legacy even up until today to introduce a two-part series about ‘Blue Ocean Leadership’. The assassination and some of its legacies were detailed in an article in the March 22 edition of the Financial Times (FT) in a piece by Simon Kuper entitled, ‘The crossroads of history”. In this article, Kuper wrote about his return to modern day Sarajevo “to try and understand his act in its local context – the context both of 1914 and 2104.” I think that Kuper did come to some understanding through his reporting, which I found to be first rate.

Yesterday I reviewed the Harvard Business Review (HBR) article entitled “Blue Ocean Leadership”, which I found to be one of the most interesting and perhaps even game-changing discussions on how to be a more effective leader that I have ever read or heard about. In Part I I wrote about what ‘Blue Ocean Leadership’ is and how it differs from conventional leadership. Today, I will review the strategies of how to execute this type of leadership and explore its implications for the Chief Compliance Officer (CCO) or compliance practitioner.

I was extraordinarily gratified to see that the authors believe that something akin to the Fair Process Doctrine should be used to address over-coming resistance to changing over to ‘Blue Ocean Leadership’. The Fair Process Doctrine recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. People are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair by employees. This means that that employees will commit to a manager’s decision—even one they disagree with—if they believe that the process the manager used to make the decision was fair.

 The authors write “the gift that fair process confers is trust and, hence, voluntary cooperation, a quality vital to the leader-follower relationship. Anyone who has ever worked in an organization understands how important trust is. If you trust the process and the people you work for, you’re willing to go the extra mile and give your best. If you don’t trust them, you’ll stick to the letter of the law that binds your contract with the organization and devote your energy to protecting your position and fighting over turf rather than to winning customers and creating value. Not only will your abilities be wasted, but they will often work against your organization’s performance.”

 The authors have a somewhat different formulation for fair process when they say that it includes “engagement, explanation and expectation clarity.” Further, the authors say “the leadership development context, the application of fair process achieves buy-in and ownership of the to-be Leadership Profiles and builds trust, preparing the ground for implementation.” The authors suggest four steps for implementing ‘Blue Ocean Leadership’.

Step 1 – Respected senior managers should spearhead the effort. Nothing speaks to company employees more than who is leading an initiative. The authors state, “strongly signals the importance of the initiative, which makes people at all levels feel respected and gives senior managers a visceral sense of what actions are needed to create a step change in leadership performance.”

Step 2 – Engaging the company’s rank and file in defining what leaders should do. This is the engagement prong of the fair process doctrine. If there is engagement, employees will “feel more deeply engaged with their leaders, because they have greater ownership of what their leaders are doing.”

Step 3 – Giving employees a say in the final decision. This allows a vertical slice of the organization, from the top to bottom to have a say in what the leadership profiles will be going forward. This comes though give and take and if senior management does not accept a proffered leadership profile, it must be prepared to defend its decision, through a “clear, sound explanation of their decision.”

Step 4 – Ease in assessment of whether expectations are being met and in monitoring progress. The authors suggest no less than monthly feedback “between leaders and their direct reports help the organization check whether it’s making headway.” The authors write that such a timeframe, will “keep leaders honest, motivate them to continue with change, and build confidence in both the process and the sincerity of the leaders. By collecting feedback from those meetings, top management can assess how rapidly leaders are making the shift from their as-is to their to-be Leadership Profiles, which becomes a key input in annual performance evaluations.”

There are many tangible benefits that the authors article discuss and those discussions can lead directly to the elimination of actions that senior management invest their time in. Even if some actions and activities cannot be entirely eliminated, they can be reduced. Conversely, these types of discussions can show senior management what acts and activities should be raised above their current level. Finally, this type of leadership protocol can show leaders the types of activities they should be engaging in that they are not currently undertaking.

For the compliance practitioner I think there are several important lessons and implications, which can be drawn from this article. Rather than start with the CCO, I want to take the opposite approach and begin with the compliance practitioner who is on the frontline. The clearest lesson from this scholarship is to “serve your customers, not the boss.” This means should try to eliminate your queries up the chain and try to handle direct issues yourself and reduce seeking approval for decisions. Frontline compliance practitioners need to raise more relevant compliance training and information to the business units or geographic areas they support. Finally, the frontline compliance practitioners should celebrate compliance successes locally.

For the mid-level compliance manager, they strive for ‘more coaching and less control’ from senior management. This means elimination of frequent requests for detailed progress reports on initiatives and programs. Further, there should be a reduction of requirements and review of justifications for decisions from the frontline compliance practitioners. Mid-level compliance practitioners should strive to not only understand but also explain compliance strategy clearly and empower frontline compliance practitioners to stretch themselves through more effective coaching. Finally, mid-level compliance managers should work to set performance goals together, share best practices across teams, business units and geographic regions and align rewards with performance.

The key for senior level compliance practitioners is to move from the day-to-day work to the bigger picture of compliance. As much as possible, senior compliance managers need to stop operational problem solving and putting out fires. If senior compliance managers cannot fully eliminate such actions, they should try and reduce the number of meetings dealing with operations improvement but also try and reduce the monitoring and coordination of middle management. Issues that senior compliance managers should try and raise up in activities awareness include dealing with poor performance, coaching and motivating their direct reports, creating a compelling strategy and then clearly communicating that strategy. Finally, senior compliance managers should develop a compliance agenda for the future (think Stephen Martin’s 1-3-5 year strategy) and advance a process for implementation of continual assessment and improvement of that strategy.

The authors write, “We never cease to be amazed by the talent and energy we see in the organizations we study. Sadly, we are equally amazed by how much of it is squandered by poor leadership. Blue ocean leadership can help put an end to that.” They put forward “a concrete, visual framework in which they can surface and discuss the improvements leaders need to make. The fairness of the process makes the implementation and monitoring of those changes far easier than in traditional top-down approaches. Moreover, blue ocean leadership achieves a transformation with less time and effort, because leaders are not trying to alter who they are and break the habits of a lifetime. They are simply changing the tasks they carry out. Better yet, one of the strengths of blue ocean leadership is its scalability. You don’t have to wait for your company’s top leadership to launch this process. Whatever management level you belong to, you can awaken the sleeping potential of your people by taking them through the four steps.”

I found their article to be quite compelling. I hope that you will consider some or all of these suggestions as a way to set up you and your compliance team to become Blue Ocean Leaders and un-tap the potential of your entire compliance team.

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, 2014

When to Bring in Investigative Counsel and Why

When should you bring in a true outsider to handle an internal investigation? What about specialized investigative counsel? Jim McGrath, who often writes about the need for specialized investigative counsel, has also pointed out on several occasions that having an independent eye on things is also a plus. However, rarely do we see both questions played out so publicly as is currently going on in the General Motors (G.M.) recall investigation. Indeed, Matthew Goldstein and Barry Meier discussed these  questions in Sunday New York Times (NYT) Business Section article by, entitled “G.M Calls the Lawyers”.

For those of you not familiar with G.M.’s problems, McGrath also wrote about them in his Internal Investigations Blog, in a post entitled “What Did GM Know and When Did They Know It?” McGrath describes the current issues as “the revelation that General Motors is the target of probes by Congress and by the National Highway Transportation Safety Administration over its handling of ignition switch defects in at least six of its popular automobiles. Failures in these switches may have resulted in as many as thirteen deaths and seemingly point to quality control failures at the automaker.” Others have estimated the death totals much higher for this defect. And, as McGrath notes, the key question is ‘what did GM know and when did they know it’?

Interestingly G.M. has hired two law firms to handle the investigation. One is King & Spalding, which handled much of the product liability litigation over the alleged defect and the second is Jenner & Block. In the NYT article, a prominent plaintiff’s lawyer, Lance Cooper, who fought GM and King & Spalding on this product liability litigation noted the obvious when he said, “They are part of the story.” By this he meant that “King & Spalding’s switch from a fierce defender of G.M. to a potential inquisitor into the company’s actions may also pose a conflict. For one, some of the firm’s lawyers may have to ask their own colleagues if they advised G.M. about whether to recall the vehicles at the time the Melton case was settled.”

More importantly for G.M., the retention of “outside counsel in these cases is part investigation, part public-relations gambit and part legal strategy. In most cases, the goal isn’t to publicly flog a company or its top executives, but rather to limit damage to an institution’s reputation or to contain the financial harm to shareholders of a publicly traded company. And it does so under the protection of the attorney-client privilege. From the point of view of the company, a well-done internal investigation can shape the accepted story of what happened — and produce findings that allow the company to negotiate for lower penalties from prosecutors or regulators down the road.” But, more importantly, to “achieve those ends, the law firms conducting the investigations must be viewed as forthright and uncompromised. In this respect, some critics have already questioned G.M.’s choices.”

The NYT quoted another lawyer, William McLucas, a partner at WilmerHale, who said, “If you are a firm that is generating substantial fees from a prospective corporate client, you may be able to come in and do a bang-up inquiry. But the perception is always going to be there; maybe you pulled your punches because there is a business relationship.” This is because if “companies want credibility with prosecutors and investors, it is generally not wise to use their regular law firms for internal inquiries.” Another expert, Charles Elson, a professor of finance at the University of Delaware who specializes in corporate governance, agreed, adding, “I would not have done it because of the optics. Public perception can be affected by using regular outside counsel.””

Adam G. Safwat, a former deputy chief of the fraud section in the Justice Department, said that the key is “Prosecutors expect an internal investigation to be an honest assessment of a company’s misdeeds or faults, “What you want to avoid is doing something that will make the prosecutor question the quality of integrity of the internal investigation.”” The aforementioned Jim McGrath was also interviewed for the article. He said, “A shrewd law firm that gets out in front of scandal can use that to its advantage in negotiating with authorities to lower penalties and sanctions. There is a great incentive to ferret out information so they can spin it.”

All of these concerns are equally valid in the Foreign Corrupt Practices Act (FCPA) or UK Bribery Act investigation context. But they are layered upon the Fair Process Doctrine. This is because procedural fairness is one of the things that will bring credibility to your Compliance Program. This Doctrine generally recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at through processes and procedures that are perceived as fair. Adhering to the Fair Process Doctrine in your Compliance Program is critical for you, as a compliance specialist or for your Compliance Department, to have credibility with the rest of the workforce.

In internal investigations, if your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Further, those involved must have confidence that any internal investigation is treated seriously and objectively. I have recently written about several aspects of internal investigations, in order to emphasize how to handle internal whistleblower complaints in light of the Dodd-Frank implications. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the process will be fair.

This fairness has several components. One would be the use of outside counsel, rather than in-house counsel to handle the investigation. Moreover, if a company uses a regular firm, it may be that other outside counsel should be brought in, particularly if the regular outside counsel has created or implemented key components that are being investigated. Further, if the company’s regular outside counsel has a large amount of business with the company, then that law firm may have a very vested interest in maintaining the status quo. Lastly, the investigation may require a level of specialization that in-house or regular outside counsel does not possess.

Living in Houston, this all played out in disastrous results during the Enron scandal. Near the end of Enron’s run, its regular outside counsel, Vinson & Elkins, investigated questionable accounting practices at Enron. As the NYT article noted, “The firm’s investigation is viewed as an utter failure or a corporate whitewash. The review essentially gave Enron a clean bill of health just months before it collapsed in one of the biggest accounting frauds of all time. In 2006, the law firm paid $30 million to Enron’s bankruptcy estate to resolve claims that its actions had contributed to the energy company’s demise.”

All of this means, your company needs to get it right in the hiring of outside counsel to handle an investigation. As McGrath wrote at the end of his blog, “the Jenner and King people will have to make like Howard Baker and ask what the president – or other ranking person with reporting authority to NHTSA – knew and when they knew it. Because the cover-up is usually worse than the underlying wrong and this one could cost GM $35 million and its reputation.” The NYT article ended with the following, “The best internal investigations are the ones that don’t receive much media attention. A company deals with a problem quickly, and if there’s something to report to authorities, the company tends to be treated leniently for its forthrightness.” Amen.

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, 2014

The Miami Dolphins-A Code Red for Compliance

Tom Cruise: Did you order a Code Red?

Jack Nicolson: You’re G__D__ right I ordered a Code Red.

The above lines were spoken in the movie version of “A Few Good Men”. If there was ever one scene which demonstrated that Tom Cruise can really act; for my money this was the scene. He held his own with Jack Nicholson, while both were just barely controlling anger that almost caused them both to burst.

I thought about the above line while reading and hearing this week about the ongoing imbroglio inside the Miami Dolphins. For those of you who do not follow pro football, Jason Martin, an offensive lineman left the team, allegedly due to the bullying and taunting of another team mate, Richie Incognito. Martin released at least one voice mail which Incognito had left on Martin’s cell phone, which to say the very least could come across as a racist rant. It also appears that Martin was ‘bullied” into paying for certain veterans on the team to fly to and be entertained in Las Vegas to the tune of over $15,000. (A trip which Martin, as a rookie, was not invited to participate in.) Martin has also alleged other taunts and bullying had been directed his way by Incognito. Incognito for his part initially claimed it was all in good fun, sort of ‘boys will be boys’ in the context of a professional football team locker room. He later changed his story to say that Dolphins management, in the form of an un-named coach, had asked him to ‘toughen up’ Martin.

When the story broke earlier this week, Dolphins management suspended Incognito. Since that time, the sports commentariat has been pontificating on this matter non-stop. Additionally, several pro football players have weighed in. Andrew Sharp, writing in Grantland.com, in a piece entitled, “The Miami Dolphins and Everything That Will Never Make Sense” summed up the different camps that pro football players broke into over this story as follows “Some players are pragmatic about what went wrong (Fletcher), a lot of players think the victim should’ve handled this differently, some are just happy that one of the dirtiest players in the league is getting his comeuppance, and others feel like they need to defend Incognito. That’s why the reactions from players have been so interesting. Everything that’s black-and-white to outsiders seems pretty gray among actual football players.”

As one of millions of American males who participated in organized sports over the years, I certainly understand that things are tolerated in locker room that are not tolerated in more polite parts of society. The sports ethos of working things out within the team is a strong one. Finally as a man sometimes you either feel the need to stand up against bullying yourself or at least society expects you to take some self-responsibility and take direct action. But the role of football and the place of the locker room sometimes are antithetical to greater societal norms. A recent example from pro football was the New Orleans Saints ‘Bounty-Gate’ Scandal where an Assistant Coach was caught on tape urging his defensive players to “go after the head” of an opposing quarterback, explaining that if you kill the head, the body will wither and die.

Not exactly the life lessons one would hope to impart in sports.

But what are the compliance lessons from this sordid episode. As you would expect, former football player Jim McGrath wrote about the matter on his site, Internal Investigations Blog, in a post entitled, “Best Focus for NFL’s Richie Incognito Investigation”. McGrath concluded, “What Incognito might have done to a teammate is rotten, seemingly antithetical to team cohesiveness, and injurious to the club’s success this season and maybe beyond. And, sadly, it is not out of character for too large a chunk of today’s NFL talent pool. But it may violate organization-wide rules and – if so – whether the Dolphins did or didn’t enforce those rules is a good focus for this inquiry.”

From my perspective and the lesson for the compliance professional is that allegations of inappropriate conduct must be taken seriously and investigated. It has been reported that the Chinese government investigations into GSK came about from a ‘disgruntled employee’ who did not believe he had received sufficient termination benefits. GSK apparently felt it had sufficient grounds to terminate the employee without the payment of such compensation. I guess not.

For many employees it is about perceived fairness. This would seem to call into play the Fair Process Doctrine, which recognizes that if there are fair procedures, not arbitrary ones, in a process involving rights, people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair.

In the context of any compliance related investigation, if your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Further, those involved must have confidence that any internal investigation is treated seriously and objectively. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the process will be fair.

Finally, if any investigation results in discipline, it must not only be administered fairly but it must be administered uniformly across the company for the violation of any compliance policy. Simply put if you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.

The Martin/Incognito affair will continue to play out for us all to see. However for the compliance professional, now is the time to review your whistleblower program and other mechanisms for employee reporting of complaints. For if employees do not believe that they are being treated fairly, they can easily become a government whistleblower under the Dodd-Frank Whistleblower provisions or act like the disgruntled employee in China, who blew the whistle on GSK.

And one last thing, do not order a ‘Code Red’ for that employee who is not viewed as a ‘team player’.

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

March Madness and Discipline Under the FCPA

Tonight is the finals of the NCAA Men’s Basketball Tournament, known as March Madness. As I went to law school at the University of Michigan, I will be pulling for the Wolverines to win the big game. If you are not a Louisville or Big East fan I hope that you can pull for us or at least throw some good mojo UM’s way as we may need all the help we can get. Go Blue!

One of the things made clear in the FCPA Guidance is that employees who engage in violations of the Foreign Corrupt Practices Act (FCPA) must be disciplined. One of the Ten Hallmarks of an Effective Compliance Program is discipline. The Guidance says that a company’s compliance program should apply from “the board room to the supply room – no one should be beyond its reach.” There should be appropriate discipline in place and administered for any violation of the FCPA or a company’s compliance program. But what if an employee’s conduct is something less than a clear violation of the FCPA? What if an employee goes right up to the line, stands next to it and kicks dirt on that line but never (seems) to go over. What should you do?

Imagine a scenario like the following. Your company is engaged in delicate negotiations to merge with another entity which will greatly increase the scope of your brand. You obviously do not want any negative information to leak out into the public sphere that your company does not follow its own Code of Conduct or the ethical values that it publicly espouses. You are brought information that one of your top sales people has engaged in a pattern of conduct that would appear not to meet your own company standards. Further, it turns out that there are videos showing the conduct in question. Not only do you see it but the company’s head of Human Resources (HR), Chief Financial Officer (CFO) and General Counsel (GC) see it as well. An internal investigation commences and it is determined that no laws are broken so you privately discipline the employee in question.

The merger goes through and thereafter it is decided that an outside law firm should conduct a more thorough investigation. This outside counsel interviews a full range of company employees and reviews internal company communications. Other company employees say that the employee in question is just very passionate about his job. However, it turns out that the focus of this outside law firm’s investigation was to determine if firing the employee in question would give that employee a basis to sue the company for wrongful termination. (The company in question is not located in the great state of Texas where you can fire anyone for a good reason, bad reason or no reason.) But even the outside law firm’s report does note that the employee in question did ‘cross the line.’ Yet you decide that no further discipline or even a follow up on the employee in question is warranted.

Now assume that the videos in question become public. There is outrage. Even the company President says that after reviewing the video it only took him “five minutes” to decide to fire the employee in question. The employee is fired and questions are being asked why you did not fire the President as well?

The above fictional scenario was based on the New York Times (NYT) article, entitled “Rutgers Officials Long Knew of Coach’s Actions”, by reporter Steve Eder. In his piece Eder details the long trail of evidence that Rutgers had been made aware of regarding the abusive behavior of its men’s basketball coach Mike Rice. Even after two investigations and presentation of a video showing Rice throwing basketballs at players, kicking them and taunting them with “homophobic slurs” Rice was not fired. Rice was reprimanded, fined and the University assigned its “sports psychologist to work with the team”. It was not until this video went viral and the whole world saw the abuse that Rice meted out to his team at practices did the outrage become sufficient enough for Rice’s termination. The Athletic Director, who had been made aware of all of the above, had requested the internal and external law firm investigations,  yet did not terminate Rice, was required to resign from all the fallout.

So just how much does it take for an entity to follow its own values? What about the employee who does ‘cross the line’ and does business in an unethical manner? Is that someone who can be trusted to follow the rules and laws like the FCPA? The FCPA Guidance makes clear that appropriate discipline should be “fairly and consistently applied across the organization. No executive should be above compliance, no employee below compliance, and no person within an organization deemed too valuable to be disciplined, if warranted. Rewarding good behavior and sanctioning bad behavior reinforces a culture of compliance and ethics throughout an organization.”

I often talk about the Fair Process Doctrine and how it behooves company’s to treat employees fairly. However, there is also a responsibility for a company to act appropriately when its employees engage in conduct that is not illegal but is so far outside the acceptable norms that it cannot be condoned. Remember what is true for Rutgers is also true for businesses in the private sector.

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

How Does Your Organization Treat Whistleblowers?

As almost everyone knows, Lance Armstrong spoke for the first time about his performance enhancing drug (PED) use recently on Oprah. On the first night he admitted for the first time that he used PEDs during his seven wins at the Tour De France. The title of my colleague Doug Cornelius’ piece in Compliance Building really said it all in his article “Lance Armstrong – A Lying Liar Just Like Madoff”. Cornelius said “What caught my attention about the Armstrong interview was the window into the mind of a pathological liar. Armstrong had been telling the lie over and over and over. He lied to the public. He lied to the press. He lied to cancer survivors. He lied under oath.”

One of the areas which came up for me was how the people who blew the whistle on Armstrong’s use of PEDs before his admission were treated and how Armstrong subsequently treated them. Armstrong admitted that he was a ‘bully’ to those who said, hinted, or even implied that he had taken PEDs. He attacked ex-teammates; wives of ex-teammates and even a masseur who saw him take such substances. He put on an aggressive PR campaign for the better part of the past decade, to which the wife of ex-Tour De France winner Greg LeMond said “I can’t describe to you the level of fear that he brings to a family.”

While I would hope that most American and European companies have moved past the situation where whistleblowers are ostracized or worse threatened, one can certainly remember the GlaxoSmithKline (GSK) whistleblower Cheryl Eckard. A 2010 article in the Guardian by Graeme Wearden, entitled “GlaxoSmithKline whistleblower awarded $96m payout”, he reported that Eckard was fired by the company “after repeatedly complaining to GSK’s management that some drugs made at Cidra were being produced in a non-sterile environment, that the factory’s water system was contaminated with micro-organisms, and that other medicines were being made in the wrong doses.” She later was awarded $96MM as her share of the settlement of a Federal Claims Act whistleblower lawsuit. Eckard was quoted as saying, “It’s difficult to survive this financially, emotionally, you lose all your friends, because all your friends are people you have at work. You really do have to understand that it’s a very difficult process but very well worth it.”

More recently there was the example of NCR Corp., as reported in the Wall Street Journal (WSJ) by Christopher M. Matthews and Samuel Rubenfeld, in an article entitled “NCR Investigates Alleged FCPA Violations”, who stated that NCR spokesperson Lou Casale said “While NCR has certain concerns about the veracity and accuracy of the allegations, NCR takes allegations of this sort very seriously and promptly began an internal investigation that is ongoing,” regarding whistleblowers claims of Foreign Corrupt Practices Act (FCPA) violations. In a later WSJ article by Matthews, entitled “NCR Discloses SEC Subpoena Related to Whistleblower”, he reported that NCR also said “NCR has certain concerns about the motivation of the purported whistleblower and the accuracy of the allegations it received, some of which appear to be untrue.”

Lastly, is the situation of two whistleblowers from the British company EADS. As reported by Carola Hoyos in a Financial Times (FT) article, entitled “Emails tell of fears over EADS payments”, Hoyos told the story of two men who notified company officials of allegations of bribery and corruption at the company and who suffered for their actions. The first, Mike Paterson, the then financial controller for an EADS subsidiary GPT, internally reported “unexplained payments to the Cayman Island bank accounts for Simec International and Duranton International, which totaled £11.5M between 2007 and 2009.” Hoyos reported that Paterson was so marginalized in his job that he was basically twiddling his thumbs all day at work.

The second whistleblower was Ian Foxley, a retired British lieutenant-colonel, who had joined the company in the spring of 2010 stationed in Saudi Arabia, to oversee a £2M contract between the British Ministry of Defence (MOD) and the Saudi Arabian National Guard. In December 2010, Foxley discovered some of the concerns which Mike Paterson had raised. According to Hoyos, “The morning after he discovered Mr. Paterson’s concerns he assessed the emails that Mr. Paterson had told him he had written over the previous three years.” This led Foxley to flee Saudi Arabia with documents of these suspicious payments, which he has turned over to the Institute of Chartered Accountants and the UK Serious Fraud Office (SFO).

What does the response of any of these three companies say about the way that it treats whistleblowers? Is it significantly different from the bullying Armstrong admitted he engaged in during his campaign to stop anyone who claimed that he was doping? While I doubt that companies will ever come to embrace whistleblowers, the US Department of Justice’s (DOJ’s) recent FCPA Guidance stated that “An effective compliance program should include a mechanism for an organization’s employees and others to report suspected or actual misconduct or violations of the company’s policies on a confidential basis and without fear of retaliation.” However, by marginalizing, attacking or even making a whistleblower fear for their life, such actions can drive a whistleblower to go the DOJ, Securities and Exchange Commission (SEC) or SFO. The Guidance recognized that “Assistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in the law enforcement arsenal.”

So what is the compliance professional to make of the Armstrong confession and how can it be used for a compliance program? A recent White Paper, entitled “Blowing the Whistle on Workplace Misconduct”, released by the Ethics Resource Center (ERC) detailed several findings that the ERC had determined through surveys, interviews and dialogues. One of the key findings in this White Paper was that that a culture of ethics within a company does matter. Such a culture should start with a strong commitment to ethics at the top, however it is also clear that this message must be reinforced throughout all levels of management, and that employees must understand that their company has the expectation that ethical standards are vital in the business’ day-to-day operations. If employees have this understanding, they are more likely to conduct themselves with integrity and report misconduct by others when they believe senior management has a genuine and long-term commitment to ethical behavior. Additionally, those employees who report misconduct are often motivated by the belief that their reports will be properly investigated. Conversely, most employees are less concerned with the particular outcome than in knowing that their report was seriously considered.

This is the ‘Fair Process Doctrine’. This Doctrine generally recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair. Adhering to the Fair Process Doctrine in two areas of your Compliance Program is critical for you, as a compliance specialist or for your Compliance Department, to have credibility with the rest of the workforce.

In this area is that of internal company investigations, if your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Furthermore, those involved must have confidence that any internal investigation is treated seriously and objectively. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the process will be fair.

This fairness has several components. One would be the use of outside counsel, rather than in-house counsel, to handle the investigation. Moreover, if company uses a regular firm, it may be that other outside counsel should be brought in, particularly if regular outside counsel has created or implemented key components which are being investigated. Further, if the company’s regular outside counsel has a large amount of business with the company, then that law firm may have a very vested interest in maintaining the status quo. Lastly, the investigation may require a level of specialization which in-house or regular outside counsel does not possess.

Phrasing it in another way, Mike Volkov, writing in his blog Corruption, Crime and Compliance, in an article entitled “How to Prevent Whistleblower Complaints”, had these suggestions: (1) Listen to the Whistleblower – In dealing with a whistleblower, it is critical to listen to the whistleblowers concerns. (2) Do Not Overpromise – At the conclusion of an initial meeting with a whistleblower, the company representative should inform the whistleblower that the company will review the allegations, conduct a “preliminary” investigation and report back to the whistleblower during, or at the conclusion of, any investigation. (3) Conduct a Fair Investigation – Depending on the nature of the allegations, a follow up inquiry should be conducted. The steps taken in the investigation should be documented.

I would add that after your investigation is complete, the Fair Process Doctrine demands that any discipline must not only be administered fairly but it must be administered uniformly across the company for the violation of any compliance policy. Simply put if you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. It cannot matter that the North American employee is a friend of yours or worse yet a ‘high producer’. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.

Lance Armstrong has and will continue to provide the ethics and compliance practitioner with many lessons. You can use his treatment of whistleblowers as an opportunity to review how your company treats such persons who make notifications of unethical or illegal conduct. With the increasing number of financial incentives available to persons to blow the whistle to government agencies, such as the SEC under the Dodd-Frank Act, it also makes very good business sense to do so.

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

Armistice Day, Remembrance Day, Veterans Day

On the 11^th minute of the 11^th day of the 11^th month in 1918, the War to End all Wars ended. While this ending did not accomplish that stated purpose, since that day we have honored all those persons who served in our Armed Forces. As you know Mary Jones has been posting for me over the past week when I had surgery and will continue to do so while am now recuperating. I wanted to thank everyone for their good wishes and I am doing as well as can be expected.

My surgery was performed on Election Day and it was not until the next day I was cognizant enough to ask a Nurse who won the election. Later that day, while still in ICU, I had an interesting conversation with another Nurse, who was from Nigeria, about our freedoms in America and that led me think about some of the things we owe all of our Veterans. I asked this Nurse what he thought about all the negative campaigning and accusations which flew back and forth; as opposed to some type of reasoned debate. He just looked at me and said “Do you know what I would have given back at home to be able to hear those things, or even say them.” The look in his eye reminded me that once again our right to vote, debate in public and otherwise engage in a free flowing dialogue about the future and destiny of our country is a freedom not held in other parts of the world, even in a country which, on paper at least, is a democracy.

I once had the rare privilege of trying a lawsuit in Hidalgo County, Texas, for 6 weeks. It was not a place friendly to defendants or corporations. One of the things I will never forget is the trial judge, Frank Evans, telling the jury panel about their rights and obligations as citizens to sit as jurors, and his comments were related to a Veteran. The Veteran was Harlon Block and he was one of the six men who raised the US Flag on Mount Suribachi on February 23, 1945. His name was enshrined outside the County Courthouse, along with the names of all other residents of Hidalgo County who have died serving our country from the Civil War to the present day. Harlon Block grew up in Weslaco, Texas, and played football at Weslaco High School. In February 1943, the entire team, consisting of 13 members, enlisted in the armed forces on the same day. Two years later, Block was one of the six men who made up one of the most iconic photos which came out of World War II and then he was killed while fighting on Iwo Jima.

The Judge who told this story was also one of those 13 boys. He told this story so that all of us might understand what it took for people to have the right to sit on a jury and judge their peers, whether in the criminal or civil context. As a trial lawyer, I think that one of our greatest freedoms is that of the Seventh Amendment which reads:

Amendment VII – Right to a jury trial

In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.

I believe that this right to a trial by jury speaks to several rights but one of those is that, in the civil context, an aggrieved party gets to tell his or her story to an independent third party. This is a powerful catharsis for any injured person. But more than getting to simply tell their story they will be judged by a process which is fair and open, through the rules of procedure and evidence. I believe it is this concept that is important for compliance. There must be a way for persons to tell (or report) stories which concern them regarding bribery and corruption. Companies must allow employees to use a helpline, report concerns or even whistle blow internally without disparagement or attacking them in public. Because if companies do not allow such a mechanism a whistleblower can go straight to the Securities and Exchange Commission (SEC) and sign up for a bounty.

However, I think that there is another compelling reason that Amendment VII is so important and how it applies directly to compliance. I call it “the light of day”. By allowing ordinary citizens to not only see but participate in the judicial process, it gives greater credibility to the entire process itself. I still think about the scene from ‘On The Waterfront’ where Terry, played by Marlon Brando, calls out to Johnny Friendly, played by Lee J. Cobb, to tell him that where he is standing “in the light of day” is a much better place to be than hiding in the shadows. Today we call that ‘transparency’ and this is something that you must have in your compliance program. Employees must see that those who make internal whistleblower reports are not attacked, demeaned or marginalized. US society is better because of both sides of Amendment VII, those being the protection for and the participation of its citizens in the judicial process. I would posit to you that transparency extends to internal reporting systems which allow employees to express concerns regarding compliance issues without fear of retaliation.

So today I want to thank all the Veterans in my family. To my Father; to Uncle John and Uncle Alvan and to my Father-in-Law Michael Rudland, who served in the British Navy and helped keep my wife’s mother country safe for its Queen and Country. A big and most heartfelt thank you to all.

And for the rest of you, if you know a Veteran, buy them a cup of coffee today or call them up and say thanks. If you see one, tell him or her thanks. Our country just showed why it is the greatest in the world by having a free election; take some time to celebrate what the men and women in our armed forces have done for us.

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, 2012

Memorial Day – A Big Thank You

Today’s is a personal blog. Monday is Memorial Day. It is traditionally the day we celebrate the men and women who have served our country in our armed forces. One of the things that I have long rued was the manner in which returning veterans were treated when they came home from Vietnam, no parades, no congratulations, no thank you for serving. In my mind one of the best things to come out of the first Gulf War was the change in how our returning veterans were treated. When they first landed on American soil, at Bangor, Maine, cheering crowds were there to greet them. I find this to be right and proper. And while I disagree with 99.99999999999999999% of what Governor Goodhair says and stands for I do agree with his suggestion that there be a national parade for the veterans of the Iraq War.

But as I said today is personal. I want to especially honor the men and women who served our country in World War II. I certainly view them as “the greatest generation” for a whole host of reasons, not in the least their collective fight against the forces of evil in the world. Name any right you hold sacred as an American and the men and women of that era fought to defend it. Right to vote, freedom of expression, freedom of religion, are but a few. However, there are many other rights that might you might not think of that we owe to these men and women who fought and sacrificed for us during this conflict.

My father served in that conflict. He is still alive and kicking today at 85. For the past 40 years he has been a labor arbitrator. He believes that working people should have due process regarding their jobs and as an arbitrator he has put that belief into practice by requiring companies who terminate employees to follow the due process requirements of termination for just cause. Put another way, if an employer is going to deliver a death penalty sanction in the workplace, in the form of job termination, it must do so fairly and justly. This does not prevent management from exercising its rights or prevent management from running its business. At a bare minimum, it means that a company must have an agreed upon disciplinary process in place and that process must be followed if the company is going to terminate an employee. A company must investigate and it must allow an employee to tell his or her side of the story, the employee must have the right for union or other representation in the process and the final appeal of any termination must be made by someone other than the original decision maker. In other words, the fair process doctrine. It is one of the rights which the greatest generation defended in that conflict.

So on this Memorial Day, I honor my father and all of the other ever-dwindling number of World War II veterans for their part in making this country the greatest country in the world. I would ask each of you to honor our veterans on Memorial Day in your own way, even if it is just a moment to reflect on those who made the ultimate sacrifice in giving their lives or those who raised their right hands and swore to protect the rest of us.

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, 2012

The End is Nigh? MLB and Fairness in Administration of a FCPA Compliance Program

Less than three months after he ruled against Major League Baseball (MLB) in the Ryan Braun suspension, Arbitrator Shyman Das was fired by MLB. He had been an approved arbitrator under the MLB Collective Bargaining Agreement for almost 13 years before he was abruptly terminated by MLB. In an article in the New York Times (NYT), entitled “Arbitrator Who Overturned Braun’s 50-Game Suspension Is Fired”, an un-named “person with knowledge of the decision said that the Braun decision was only one of several factors that led to Das’ dismissal.” Apparently MLB thought it was the National Football League (NFL) in that if you don’t play my way, you can take the highway. Or maybe MLB will just fire every arbitrator who rules against it until there are no arbitrators left.

This firing of an arbitrator, whose job it is to follow the collective bargaining agreement in making his rulings, reminded me of the issue of fairness as a key component of a compliance program. I have written about the Fair Process Doctrine, which generally recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair.

However, there is another way to look at fairness in the compliance context. In the recent IQPC, Contract Risk Management conference, held in Houston, I led a panel discussion on Foreign Corrupt Practices Act (FCPA) compliance issues. One of the panelists talked about fairness in the context of administration of your compliance program. Another way to view it might be termed consistency, but I was intrigued that he chose to use the word ‘fairness’. He said that if you are going to discipline an employee for violation of your Company’s Code of Conduct or Code of Business Ethics, you must do so consistently across the board. Discipline must not only be administered fairly but it must be administered uniformly across the company for the violation of any compliance policy. Simply put, if you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. It cannot matter that the North American employee is a friend of yours or worse yet a ‘high producer’. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.

In addition to the area of discipline, which may be administered after the completion of any compliance investigation, you must also place compliance firmly as a part of ongoing employee evaluations and promotions. If your company is seen to advance and only reward employees who achieve their numbers by “whatever means necessary”, other employees will certainly take note and it will be understood what management evaluates and rewards employees upon.

I believe that in many ways, Andre Agassi was right that “perception is reality”. If your employees perceive that your compliance program is administered fairly, there is a much better chance that they will buy into the compliance program and have faith in it. However, if you fire employees in Brazil for falsifying expense reports and do not do so when US employees engage in the same behavior, this may well destroy the credibility that you have worked hard to build up.

Fortunately MLB cannot always act in such a unilateral manner, as MLB players have a collective bargaining agreement which protects them, somewhat, from arbitrary and capricious actions by MLB. However, not all employees have such protections and, subsequently, this means that compliance practitioners must make fairness a part of any compliance program going forward.

We end by noting that the Mayan calendar predicts the end of the world in 2012. This past week saw two potential indicia of this phenomenon. First Manchester City won the English Premier League title with two goals scored during extra time in the final game of the season AND the Baltimore Orioles not only lead the American League East for the first time in 20 years but have the best record in baseball. Happy weekend to all….

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, 2012

The Story of Ajax: Fairness in Rewarding Employee Behaviors

How does your company deal with the question of fairness in its compliance program? I thought about that question while reading an article in the New York Times (NYT), entitled “That Eternal Question of Fairness”, by Nancy Koehn. In her article, Koehn discussed the book “The Ajax Dilemma: Justice, Fairness and Rewards” written by Paul Woodruff which considers how a company might distribute rewards to its employees “without damaging the larger community.” I have written about the Fair Process Doctrine which generally is recognized as allowing employees to accept a negative result if they think that the process through which the result was determined was fair and not arbitrary and capricious. In the Department of Justice’s (DOJ) 13 point minimum best practices compliance program, Item 10 states:

10.  Discipline. A Company should have appropriate disciplinary procedures to address, among other things, violations of the anti-corruption laws and the Company’s anti-corruption compliance code, policies, and procedures by the Company’s directors, officers, and employees. A Company should implement procedures to ensure that where misconduct is discovered, reasonable steps are taken to remedy the harm resulting from such misconduct, and to ensure that appropriate steps are taken to prevent further similar misconduct, including assessing the internal controls, ethics, and compliance program and making modifications necessary to ensure the program is effective.

However, I believe that the DOJ best practices are more active than the ‘stick’ of employee discipline to make a compliance program effective and I believe that it also requires a ‘carrot’. This requirement is codified in the US Sentencing Guidelines with the following language, “The organization’s compliance and ethics program shall be promoted and enforced consistently throughout the organization through (A) appropriate incentives to perform in accordance with the compliance and ethics program; and (B) appropriate disciplinary measures for engaging in criminal conduct and for failing to take reasonable steps to prevent or detect criminal conduct.”

I have advocated that the Compliance Department work with Human Resources (HR) to ensure that rewards are handed out to those employees who integrate such ethical and compliant behavior into their individual work practices going forward.  One of the very important functions of HR is assisting management in setting the criteria for employee bonuses and in the evaluation of employees for those bonuses. This is an equally important role in conveying the company message of adherence to a Foreign Corrupt Practices Act (FCPA) compliance and ethics policy.

Ajax relates to all of these fairness issues through his story from the Iliad. He was one of two Greek warriors who were in line to receive the armor from the mighty Achilles, after he was slain by the Trojan Prince Hector. Achilles’ armor was to be rewarded by the Greek King Agamemnon to “the Army’s most valuable soldier.” Ajax and Odysseus competed for the prize via a speech made before the King. The book’s author uses this speech competition and Agamemnon’s subsequent award of Achilles armor to Odysseus to explore the issues of rewards, which he says “mark the difference between winners and losers.” Paraphrasing several questions that Koehn asked about communities: Which does your company value more: Cleverness or hard work?; Strength or intelligence?; Loyalty or inventiveness?

These questions can play out in a company in a variety of ways. Does your company identify early on in an employee’s career the propensity for compliance and ethics by focusing on leadership behaviors in addition to simply business excellence? If a company has an employee who meets, or exceeds, all his sales targets, but does so in a manner which is opposite to the company’s stated business ethics values, other employees will watch and see how that employee is treated. Is that employee rewarded with a large bonus? Is that employee promoted or are the employee’s violations of the company’s compliance and ethics policies swept under the carpet? If the employee is rewarded, both monetarily and through promotions, or in any way not sanctioned for unethical or non-compliant behavior, it will be noticed and other employees will act accordingly. I think one of requirements under the Sentencing Guidelines is to ensure consistent application of company values throughout the organization, including those identified as ‘rising stars’.

In her book review, Koehn states that she believes the Ajax example still has relevance today. Most employees are like Ajax, loyally doing the important day-to-day work. If doing business in a manner antithetical to a company’s stated culture of ethics and compliance is seen to be rewarded then those loyal, hard-working employees may well stop working in a compliant manner. The end for Ajax was not good, as after the King’s award of Achilles armor to Odysseus, his anger exploded and he lost his life, his family and his reputation down to this day. From this lesson we draw the conclusion that rewards must be distributed in a way to ensure a company’s health. This, the author believes, is why the “story of Ajax is sure to resonate with many” even today.

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, 2012