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What are the effects of C-Suite involvement in bribery and corruption?

Tom Fox | August 28, 2017

What is the true cost of a catastrophic failure of compliance? What happens when bribery and corruption extends to the C-Suite? If a CEO is taken down from a compliance and ethics failure, what will be the effect on the business of the organization? In the United States, there have been just a few FCPA enforcement actions where the conduct reached up in to the C-Suite, even fewer where C-Suiters have been prosecuted.

The Odebrecht corruption enforcement action took down the CEO of the organization. It also damaged the entire company as a large part of its business model was based on obtaining contracts through the bribery of the governmental decision makers. Yet, there is another business effect not as often noted, largely due to the paucity of company leaders prosecuted for bribery and corruption. As reports noted, Lee Jae-yong, the heir and head of the world wide conglomerate, Samsung was found guilty of bribing the former President of South Korea and has been sentenced to five years in prison.

Similar to lack of leadership at Uber Technologies after former CEO Travis Kalanick was let go, Samsung has been rudderless at the top of the organization since February when Lee was arrested. It was even reported that “as recently as this week, the full Board of Samsung electronics hadn’t been briefed” on what the company might do if Lee was sentenced to a lengthy prison stay. This failure of leadership could be crucial not only as the company now has to fight the worldwide impression of a business built on corrupt actors and corrupt actions but also on the business loss from this absence of guidance.

The most relevant FCPA example may be that of Panalpina which lost its west African business due to its massive bribery and corruption schemes in that part of the globe for years; as a result of its FCPA violation and attendant enforcement action. For compliance, the bottom line is the same for the business operations; C-Suite involvement in the bribery and corruption can never lead to anything positive.