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The Conundrum Of Global Ethics Compliance

By Todd Neff — June 8, 2007

hen in Rome,” might be a wonderful dictum for world travelers, but it can only go so far in multinational corporations, Eric Hinton says.

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Hinton, manager of corporate ethics and compliance at Caterpillar, which sells its heavy equipment in about 200 countries, says there are times when corporate ethics must trump local custom.

“I think we have to avoid being the ugly Americans when rolling things out or in developing guidelines,” Hinton said at Compliance Week 2007 on Thursday. “But if the local custom in Nigeria is to bribe people, that’s not acceptable. Just because it’s OK in one culture doesn’t mean that we as a company are going to accept it.”

Hinton and other international ethics experts discussed the challenges facing corporate ethicists as companies try to maintain American standards while maintaining the requisite local flavor in locales as diverse as Denmark and Djibouti.

Establishing global codes of conduct is one place to start, they said, but that is no easy task. Altria, whose 80,000 employees work in about 100 countries, produced and distributed a 48-page code of conduct, said Jack Lenzi, chief compliance officer for Altria Corporate Services. But it didn’t end there.

There was no reason to explain the nuances of the Foreign Corrupt Practices Act to someone manning a cigarette machine in Kazakhstan, Lenzi said, so they developed an eight-page code for more junior employees. It was translated into two dozen languages. A separate, much-translated code for manufacturing employees followed.

The local-language products were rolled out with a local communication program with local teams, Lenzi said.

Local habits may conflict with corporate ethics in ways more subtle than outright bribery, said David Golden, director of global business conduct and corporate audit services for Eastman Chemical. He cited the example of the red envelopes handed out by the Chinese in the beginning of the Chinese new year. Not handing out envelopes may be bad for business, Golden said, but the practice can easily turn nefarious. Knowing the difference can mean the difference between compliance and corruption.

Golden

Golden said he tells employees in various countries to ask themselves three questions: (1) How does it feel inside? (2) Have you told your supervisor? and (3) What would it look like on the front page of the local paper? “If after [number] three you’re still not sure, give me a call,” he tells them.

James Sanislow, director of global ethics and compliance at Chemtura Corp., said his company establishes on-the-ground liaisons in the 40 countries in which it operates. They make sure locals understand and are present to offer explanation.

Requests for big-time bribes is generally not an issue, Altria’s Lenzi said.

“It’s not the million-dollar payment to get a contract,” Lenzi said. “It’s the junior, junior, junior employee who demands a payment to let an item cross the border.”

Lenzi said Central Asia and Asia proper are where Altria runs into such problems, and that patience is key to overcoming—as is going over the low-level official’s head and being persistent.

With respect to hotlines and help lines, moderator Paul Rew, European counsel for Integrity Interactive, said European hesitance about them stems from a cultural memories of Nazi oppression and, later, Stasi-style state monitoring in Eastern Europe.

Sanislow said Chemtura has taken to calling it a “resource line,” expanding the definition and, hopefully, lessening any stigma associated with using it. He said the resource line was for crisis reporting within the organization, contact information for travel emergencies, and even a conduit for emergency conference calls among the corporate board.

“We toned down the idea of this single-use hotline being a red phone for calling New York and getting an American on the phone to help solve the problem, which a lot of people looked away from,” Sanislow said.

Lenzi said Altria calls their hotline an “integrity help line.”

“We’ve spent an enormous amount of time speaking with employees about the importance of asking questions, raising concerns, and making an allegations as a way of protecting selves and, ultimately, the company,” Lenzi said.

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