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A little bribery here, a little bribery there

Bill Coffin | August 7, 2017

Compliance Week covers bribery extensively, as it’s one of the forms of wrongdoing that compliance programs are supposed to prevent. As such, I find bribery cases among elected officials especially interesting, as they tend to be the focus for where a lot of otherwise honest businesses end up crossing the line. The notion that having to pay bribes to succeed in business is an insidious one many organizations face, and it requires individuals to make tough calls in accordance with their organizations’ code of conduct, and it requires organizations to give personnel the leeway they would need to forsake business if it means serving a higher purpose: operating within the boundaries of the law and the ethical parameters of the organization itself.

I originally hail from the Lehigh Valley, Pennsylvania—a smallish region some 60 miles north of Philadelphia and some 80 miles west of New York city that mainly consists of the cities of Allentown, Bethlehem, and Easton (my hometown). It’s always fun to see your old stomping grounds appear in the larger news, but not so when the news is bad, and so I was interested to see a story this week involving a bribery scandal in Allentown. Long story short, the mayor there has been indicted for various “pay to play” schemes that involve fairly unimaginative bribery—tickets to football games, pricey dinners, etc. The latest wrinkle is that local prosecutors are considering going after those who paid the bribes as well, which at this point include a few local aspiring politicians, including the Montgomery County sheriff. (Montgomery is just south of Allentown). This is one of those cases that will get uglier before it clears up, and it reminds me of an even bigger scandal even closer to home.

A few years ago, Ocean Township, NJ, where I currently live, was at the heart of a major FBI corruption sting called Bid Rig III, which ended up with the arrests of nearly 50 people across the state. It all began when a local businessman, Solomon Dwek, got busted for bank fraud when he passed a $25 million bad check at the drive-through of a local bank. Now, the compliance issues there are obvious, but the bottom line was that Dwek knew the people who worked at the bank, did a lot of business there, sweet-talked the person running the drive-through that day, and passed the check. Dwek’s financial empire was essentially a Ponzi scheme on the verge of collapse, and when his check bounced, the Feds—already suspicious of corruption between real estate developers and local governments all along the Jersey Shore—pounced. Dwek was arrested and sentenced to jail, but not before he sung like a canary. In short order, the FBI had the details on a web of bribery and corruption that implicated, among others, the mayor of Ocean, the majors of Hoboken and Jersey City, and even a rabbi in Brooklyn who was himself busted for illegal organ trafficking. What can I say? When people do dirty business in New Jersey, they don’t kid around.

But as I think about that happened locally, and what is happening in Allentown, I think about how often we focus on the biggest, most eye-catching cases of corruption. But the reality of corruption isn’t those super-sized cases that make the news a few times a year. It’s the much smaller cases that happen at the state, county, and local level every week of every year. The number of public officials ensnared in those schemes is depressingly large. But the number of businesses that go along with them is even larger. We often think of compliance as a function of large, public companies in heavily regulated spaces. And one of the greatest things about compliance is how the best programs involve a great deal of operational instruction, education and cultural awareness. Those efforts don’t just keep a company’s nose clean; they instruct entire generations of employees how to do the right thing in business. Smaller companies without big compliance programs don’t often get to benefit from those things if all their compliance program consists of is a single harried lawyer making sure the paperwork is filed correctly and on time. But as local corruption stories indicate, great compliance is needed here just as much as it’s needed by the world’s largest companies.

There are plenty of ways we can address this, but the key is to address it together, as a community. All of you in the audience surely know somebody working at a company with an undersized compliance function and perhaps an underdeveloped sense of compliance itself. Be their mentor; show them the kinds of external resources you make use of on a daily basis, whether it’s a Compliance Week Webinar, our LinkedIn page, or whatever else you feel might be helpful. Not everyone has the budget for a big compliance program, but everyone has the need to act as if they did. Let’s figure out how we can make sure none of our colleagues get left behind as we all work for a bigger, better, cleaner, and more compliant future.