The American Lawyer - Compliance, Winter 2012

Combating Misconduct
The case for developing a new ethical paradigm.

Without a robust ethical plat- form, corporate compliance is an ex post facto and tactical exercise. It’s time to develop a new paradigm for corporate character. This is particularly important in an economic downturn, when executives send messages about profit-or-else, and fears about job security can supersede ethical decision making.

It’s clear that conventional reporting
mechanisms are not working. Indeed, the
best evidence of the inadequacy of tradi-
tional compliance programs is the list of
existent clients to cover up the prior mis-
conduct the next. We need to prevent or
deter misconduct, with a better ground-
ing in operational ethics, rendering com-
pliance less necessary.

Ethical organizations are driven by
a common ethical vision that is clear,
understandable, and viable.

distinguished companies that have been the subject of Securities and Exchange Commission enforcement actions, from firms such as The Goldman Sachs Group Inc. and The Bear Stearns Companies Inc., to corporate giants like Tyco International Ltd and Siemens AG. Surely these organizations had vigilant compliance officers and sufficient resources to establish state-of-the-art compliance programs. However, during the relevant times, many of these organizations lacked a strong ethical culture.

Misconduct often results from long
chains of little mistakes; one break-
down in judgment cascades to another
breakdown, and then another. It could
be smoothing out revenue figures one
financial quarter, and then creating non-
vironment where employees have a sense
of belonging and are concerned about the
well-being of their colleagues, customers,
and the organization as a whole. Organi-
zations can foster employee engagement
in the workplace by investing more time
in laying the brick and mortar of the cor-
porate community in order to promote
ethical conduct.