Gifts, Entertainment and Travel

Perhaps the most common forms of COIs in business organizations are in the related areas of gifts, entertainment and travel. In this section, we will examine cases and compliance measures relating to both the provision and receipt of these sorts of items of value

The most interesting conflict of interest case of the (still young) year

The most prominent COI story in the past few days comes to us from Mexico where, as described in The Economist, that country’s president Enrique Peña Nieto “announced that he, his wife and his finance minister will become the first subjects of a conflict-of-interest investigation” that was “triggered by revelations that [they] bought houses on credit from affiliates of a building firm that has benefited from government contracts.” But for me the most intriguing story of the week (and indeed the year, at least so far) comes from the ethical wonderland that I call my home – New Jersey.

As reported initially by the Bergen Record:   “Federal prosecutors have [launched a probe] into a flight route initiated by United [Airlines] while [David] Samson was chairman of the [Port Authority, which] operates [Newark Liberty Airport]. The route provided non-stop service between Newark and Columbia Metropolitan Airport in South Carolina — about 50 miles from a home where Samson often spent weekends with his wife. United halted the non-stop route on April 1 of last year, just three days after Samson resigned under a cloud. Samson referred to the twice-a-week route — with a flight leaving Newark on Thursday evenings and another returning on Monday mornings — as ‘the chairman’s flight,’ one source said. Federal aviation records show that during the 19 months United offered the non-stop service, the 50-seat planes that flew the route were, on average, only about half full. United… was in regular negotiations with the Port Authority and the Christie administration during Samson’s tenure over issues that included expansion of the airline’s service to Atlantic City and the extension of the PATH train to Newark…” A story from NJ.Com added that the  flight’s booking rate of 50% was significantly lower than “the rate of 85 percent or higher common among carriers” and also that the Chair of the NJ assembly’s transportation committee said the benefit to United of running this unprofitable route “could be PATH. It could be how much they pay for landing planes. It could be for how flights are dispatched at the airport. It could be a multitude of things. And it could be none of them.”

Assuming for the sake of discussion that it is indeed at least one of those or other financial benefits, the case should be interesting to COI aficionados  for several reasons.

First, the main law enforcement challenges to investigating the matter will likely be (as it is many COI/corruption cases) proving wrongful intent.  Presumably, Samson knew enough not to document what was seemingly happening here (although his comments about the “chairman’s flight” may suggest otherwise),  but what about United?  Given how cost conscious airlines have been in recent years, one imagines that someone at the company would have needed to document why they were running half full planes.  Moreover, for various reasons this seems like the sort of arrangement that would have been known at a reasonably high level in the company (although finding documentation of that may be a taller order).

Second, it will also be interesting to see what role, if any, United’s compliance program played in these events. In light of how many people at the airline could well have had some suspicion about these flights, it would be pretty damning if none of them called the C&E helpline. On the other hand, if the issue was raised internally and buried, that would be even worse.

Third, it may be noteworthy that while the Company’s code of conduct does have a section called “When the government is the customer,” the bribery discussion there is limited to international transactions.   Perhaps like a lot of US companies, United’s compliance team failed to grasp the risks of homegrown corruption generally (and the Jersey variety in particular).  Other companies may wish to revisit their own codes to see if they could be subject to the same criticism.

Two final notes.  First, the facts of this case are just beginning to emerge and the speculations in my post should not be read to suggest that  Samson or United are necessarily guilty of corruption. Seriously.  Second, for an earlier story about a possible COI involving Samson (and his connections to the ethically challenged Christie administration) see this post  and the article linked to therein.

Just friends? Chris Christie and Jerry Jones

A long time ago – before Enron, World Com and Sarbanes-Oxley – business ethics issues in general and conflicts of interest compliance requirements in particular had little prominence in the work lives of the average employee.  But now – through codes of conduct, policies, training, certifications, hotline calls, investigations and discipline – that has changed.

Of course, not all ethics issues are of equal interest to all employees.  But COIs tend to be high on the list, because of their inherently personal nature.  In the post-Enron era, employees who used to be allowed to receive hospitality from suppliers often now are barred from doing so.  And to a large degree they accept that as being good for their companies and therefore ultimately good for themselves – so long as the rules apply to everyone equally.   Indeed,  when one of their colleagues breaks those rules the hotline can ring off the hook – often motivated not by jealousy but a sense of fairness that is truly innate to the human species. (For more on the evolutionary foundation of fairness as a moral value see this chapter from Jon Haidt’s The Righteous Mind.)

Over the past week, the story of NJ governor and presidential aspirant  Chris Christie  and family being flown to a Cowboys game in Dallas by the team’s owner Jerry Jones and being entertained in Jones’ sky box has been oft told in the press and echoed by football fans throughout the country too.  The COI issue is that a company in which Jones was a significant investor received a lucrative contract with the Port Authority, an entity over which, as governor of New Jersey, Christie has powerful influence (and also an entity which has been plagued by patronage).  Here is an article from In These Times  with more details about the story.

Christie’s defense is that he and Jones were  personal friends. While it is true that the relevant NJ ethics code does permit gifts from personal friends, this cannot mean what the governor claims as that would essentially permit any government employee to receive a gift from any vendor by declaring his or her friendship with that vendor. Not only would such a loophole gut the ethics law, it would encourage vendors and government employees to become real friends  – thereby making the COI worse and further discouraging ethical vendors from competing for the government’s business. (For the details of the purported Christie-Jones friendship see this story  – in which the governor says the friendship started only a few months after Jones’ company got the Port Authority contract, which underscores that this is not the kind of relationship for which the gift exception was designed.)

As a former federal prosecutor who brought many corruption cases, the governor almost certainly knows that this interpretation of the ethics law is untenable.* But as a politician with his eyes on the White House he seems to have made the choice that his “jury” – potential voters – won’t care.

Years ago, another brash politician – the first Mayor Daley of Chicago – was caught in a conflict of interest involving a family member getting government business, and responded:  “If I can’t help my sons, then [my critics] can kiss my ass. I make no apologies to anyone.”  Given the broad tolerance for COIs at the time,  it is not surprising that this didn’t seem to hurt him (at least from what I recall about the incident).

But in the post-Enron era that way of thinking may no longer make sense.  As noted above, many American workers are reminded constantly about the importance of an ethical approach to COIs – and know that if they tried to do something like what was done here they would probably be fired.  And the obvious unfairness of a double standard like this could end up hurting Governor Christie in ways that the late Mayor Daley could not have imagined – but which the governor should have foreseen.

___

* The Justice Department’s example of when the personal relationship exemption to gift rules applies:  Jenny is employed as a researcher by the Veteran’s Administration. Her cousin and close friend, Zach, works for a pharmaceutical company that does business with the VA. Jenny’s 40th birthday is approaching and Zach and his wife have invited Jenny and her husband out to dinner to celebrate the occasion. May Jenny accept? Yes.Gifts are permitted where the circumstances make it clear that the gift is motivated by a family relationship or personal friendship rather than the position of the employee.

Some other reading of possible interest:

A story from several years ago about a Justice Department Inspector General Report finding travel expense abuses by Christie when he was a US Attorney.

An earlier post on attendance at sporting events and COIs.

 

The conflict of interest case of the year

With less than four months to go, the corruption case again the governor of Virginia and his wife seems destined for 2014 COI case of the year honors.  But while much of the press revolved around the Governor’s unsavory – and unsuccessful – trial strategy of throwing his wife/co-defendant “under the bus,” for COI aficionados what is noteworthy about the prosecution lies elsewhere.

First, on the public policy level, it highlights – as much as any case has in recent memory – the need for strong government ethics laws at the state level.    Perhaps states like Virginia (and NJ, where I live, which is infamous for its culture of corruption) will now look for guidance to those states that have been successful on this front, such as ethics front-runner Oregon.  

Second, on a law enforcement level, the case is precedent setting.  As described in this Washington Post article : “[L]egal experts say the case — especially if it survives an appeal — could encourage prosecutors to pursue similar charges against officials who take not-so-obviously significant actions on behalf of their alleged bribers and make it easier for them to win convictions. ‘I think the case clearly pushes the boundary of ‘official act’ out a bit farther, and I think that’s quite potentially important,’ said Patrick O’Donnell, a white-collar criminal defense lawyer at Harris, Wiltshire & Grannis. ‘It’s striking that here, McDonnell was not convicted on any traditional exercise of gubernatorial power. It wasn’t about a budget or a bill or a veto or appointment or a regulation.’ [Rather,] ‘[t]he McDonnells stand convicted of conspiring to lend the prestige of the governor’s office to Richmond businessman Jonnie R. Williams … by arranging meetings for him with state officials, allowing him to throw an event at the Virginia governor’s mansion and gently advocating for state studies of a product that Williams’s company sold.”

Third, and most relevant to C&E professionals, the case appears to be a striking example of the behaviorist learning, “we are not as ethical as we think” – a principle that helps underscores the need for strong C&E programs in organizations of all kinds.  That is,  based on McDonnell’s testimony,  there seemed to me a real possibility that he genuinely believed that he was not corrupted by the gifts and loans from Williams, and there is indeed some indication that the jurors found him sincere, at least generally.  But believing yourself to be unaffected by a conflict of interest doesn’t make it true – given the results of various behavioral ethics studies showing that COIs impact us considerably more than we appreciate.  (Posts relating to some of these studies are collected here.)    Perhaps this makes the McDonnell case – although more about conflicts in government than in business – a teachable moment for C&E practitioners in all settings.

Mitigating holiday cheer: what’s new in gifts and entertainment compliance

It is that time of year again, and so we look once more at what’s new under the C&E officer’s tree to help with the timeless challenge of gifts and entertainment (G&E)  compliance.

First, in what seems like just yesterday (because  it was just yesterday), “[a]n employee of Deutsche Bank‘s Japanese brokerage unit was arrested on … suspicion of showering a local pension fund manager with expensive meals, golf outings and trips overseas in return for some 1 billion yen in investments,”  as reported by the NY Times,   The piece continues: “The wining and dining of corporate pension fund executives had, in fact, become commonplace at Deutsche Securities, which set up shop in Tokyo in 2005, [t]he Nikkei business daily said. In some cases, the feasting got so out of hand that employees filed the mounting expenses over many days in a bid not to attract attention, the paper said. The [Securities and Exchange Surveillance Commission] advised that the government reprimand Tokyo-based Deutsche Securities over its conduct.”

This story is still developing, but it seems like a huge black eye for the bank.  However, presumably the lessons of how one of the world’s largest financial institutions could allow this type of very damaging conduct to occur will be a gift to others seeking to stay out of trouble.  (Among other things, this case could show why high-risk organizations need to do more  G&E monitoring, but that’s just a guess.)

Indeed, one of the most useful things that C&E officers can do regarding G&E is to keep track of others’ missteps in this treacherous area – and use that information in training and periodic communications to employees.   A helpful stocking stuffer in that regard is   this chart recently prepared by K&L Gates partners Amy Sommers and Matt Morley showing FCPA enforcement actions involving gift-giving in China, which I found via one of Tom Fox’s many excellent writings on anti-corruption compliance.

Another G&E  goody  to consider getting for that hard-to-please C&E officer on your shopping list is this recently published article “Honing a compliant gifts policy: the trends we are seeing today,” by Laura Flippin of DLA Piper. Among these trends:  “setting global limits on the amount that may be spent on any single meal, with three tiers covering low, medium and high cost markets. …Limiting gift giving, globally, to no more than $50 worth of low-value items which may be given at any one time to a single individual, with a cap of no more than four gifts annually…Requiring all gifts to be sourced centrally by procurement and prohibiting the use of vouchers or gift cards that can be easily converted to cash….Mandating prior written approval from a regional or above-country compliance officer if an employee wants to provide more than two gifts yearly to any single recipient (whether or not a government official) …Using a specific, documented process to address hospitality provided for high-profile, unique events in countries where the company has a large presence or business interests – for instance, the London Olympics.”

Of course, global companies increasingly need to keep track of the increasing number of “local” G&E laws and regulations, e.g., those of Nigeria – presented here by ethixBase  (the publisher of the COI Blog).  EthixBase has compiled  domestic gift giving rules from more than 80 countries – something that should bring joy to even the most Scrooge-like C&E officer of a global company.

Finally, some recent possibly relevant articles from our own back pages:

–          Gifts, entertainment and “soft core” corruption.

–          Complying with customers’ COI requirements.

–          COIs and industry culture.

Ho, ho, ho…

 

Gifts, entertainment and “soft-core” corruption

I once asked students in an executive MBA ethics class if they thought that their employer organizations should have restrictive policies on gift receiving.  Nearly all said that such policies were unnecessary – as the students were sure that they wouldn’t be corrupted by gifts from suppliers or customers.  I then asked if the school should allow teachers to receive gifts and entertainment from students. As you can imagine, the response was very different.

The ethical challenges of dealing with gifts have been with us since at least around 1500 B.C. when, according to this piece on the Knowledge at Wharton web site, “Gimil-Ninurta — a poor citizen of the city of Nippur in Mesopotamia — tried to enlist the assistance of the mayor of Nippur by offering him a goat. The mayor accepted the goat, but rather than providing assistance ordered that Gimil-Ninurta be beaten.” However, the extraordinary focus in present times on preventing bribery has drawn unprecedented attention to more “soft-core” versions of the problem, including traditional gift giving.  (For instance, in the past week, several large companies in Malaysia adopted a “no festive gift” policy.)

Global companies addressing issues of gift giving and receiving in the current environment indeed have a lot to deal with.

First, there is a growing body of laws and rules from around the world governing gift giving that must be complied with.  (The co-publisher of this blog –  ethiXbase – maintains an extensive data base of these standards for its members.)  For many companies and individuals, what previously had been in the realm of ethics/good-to-do has moved squarely into the province of law/need-to-do.

Second, one needs to be mindful of different cultural standards relating to gift giving and other COI-related issues, as discussed in this guest post  by Lori Tansey Martens of the International Business Ethics Institute.  A gifts-and-entertainment policy that is culturally narrow-minded can be ineffective.

Third, the operational aspects of compliance/ethics in this area can be daunting. Among other things, not only global companies but also organizations in highly regulated businesses may need to use technology to promote and track compliance to a sufficient degree, as described in this guest post by Bill Sacks of HCCS.

Moreover, all companies – regardless of where they operate or what they do – should have well thought out compliance standards for gift giving and receiving. This post  describes some of the considerations that might go into such a policy and this survey conducted by the Society of Corporate Compliance and Ethics in 2012 (available to members on the organization’s web site) could be useful for policy drafting, as well. For global companies, this recent piece by Tom Fox on FCPA cases involving gifts, entertainment and travel should be a helpful resource.

Finally, one should consider the role of behavioral ethics in developing/implementing gift-related compliance measures, and particularly the fact that we tend to underestimate how much COIs can impact our judgment. For instance, last year, the Wall Street Journal  reported on a study in which different groups of professionals were asked to assess the necessity of conflict of interest standards of conduct both for other professions and their own: “Doctors participating in [in a study] tended to think [certain COI-related] strictures sounded pretty reasonable [when applied to financial planners]. However, when ‘financial planners’ was replaced by ‘doctors,’ and ‘investment companies’ by ‘pharmaceutical companies,’ the doctors started to raise objections — that the supposed conflicts were hypothetical, for example, and that no one’s views about which drugs to prescribe could ever be swayed by a coffee mug. And investment managers surveyed by the researchers reacted similarly: The rules for doctors sounded fine to them, but the ones for investment professionals seemed petty and unnecessary.”

Is there a behaviorist-based cure for this aspect of “soft-core” corruption? Dan Ariely’s column in this weekend’s Wall Street Journal – although not specifically about COIs/gifts – may be instructive on that score.  He was asked the broad question, “What is the best way to inject some rationality into our decision-making?” and responded, “I am not certain of the best way, but here is one approach that might help: When we face decisions, we are trapped within our own perspective—our own special motivations and emotions, our egocentric view of the world at that moment. To make decisions that are more rational, we want to eliminate those barriers and look at the situation more objectively. One way to do this is to think not of making a decision for yourself but of recommending a decision for somebody else you like. This lets you view the situation in a colder, more detached way and make better decisions.” His piece also describes the results of a fascinating experiment that helps demonstrate this.

One can readily see how this framework could be useful for promoting ethical and law abiding behavior relating to gift giving and receiving, where our instincts might not be a reliable guide for identifying appropriate behavior.  Indeed, Ariely’s recommendation could help business people address many other areas of ethical challenge too.

Complying with customers’ conflict of interest requirements

A federal indictment handed down this week charged a former CEO of CalPERS (the California Public Employees Retirement System), who had become a consultant to a “placement agent” just one day after leaving CalPERS,  with defrauding Apollo Global Management in connection with Apollo’s payment of  14 million dollars in fees to the placement agent for its role in persuading CalPERS to hire Apollo to manage some of its funds.  As charged in the indictment, Apollo asked the agent to have a CalPERS official sign a letter saying that they were aware of the placement agent’s role in getting Apollo the business, but CalPERSs’ officials – presumably concerned with the conflict of interest involved – refused to do so. So, the former CEO and a colleague at the placement agent allegedly created and presented to Apollo phony letters evidencing such approval.

This is a fairly unusual (as well as tangled) case and apparently leaves open a number of  important questions regarding CapPERS and Apollo.  But it also raises the broader and more general question which countless companies face on a frequent basis:  what should be done to ensure that one’s employees and agents are complying with a customer’s COI standards, (a topic we haven’t explored since the early days of the blog)?

There are a number of possibilities here, including the following:

– Mandating that your company’s employees/agents comply with relevant customer standards, i.e., building such an expectation into your code of conduct, other policies and agency agreements.

– Training and otherwise communicating periodically to at-risk employees and agents on such expectations.

– Making an effort to ensure that employees/agents are in fact aware of applicable customer standards, such as by collecting and distributing relevant sections (e.g., on gifts, entertainment and travel) of customer codes of conduct to employees/agents who deal with such parties.

– Including such standards in one’s audit protocols.

– Contacting the customer with respect to specific contemplated actions that could raise COI  issues under the customer’s policies or relevant law.

The last of these measures is, of course, the most delicate – and it is not something that companies tend to do for small-scale matters (e.g., taking a customer’s employee to lunch).  However, for potentially weightier COI issues it is often warranted (and, of course, should be done where required by law – as was the case in the CapPERS matter).

Finally, it is worth considering that there are different  types of effort that each of the above compliance measures can entail.  For instance, regarding the delicate but potentially important customer-contact-related measure one can require that:

– Written notice be given to the customer (e.g., the supervisor of an employee of a government agency who one would like to invite on a business trip) –  a one-way written communication.

– The customer confirm in writing its approval of the contemplated action (e.g., what Apollo sought to do here) –  a two-way written communication.

– There there be an in-person or telephonic contact with the customer – to avoid the type of fraud that happened in the CalPERs case.

Conflicts of interest and industry culture

In the C&E world, culture most often refers to the culture of an organization.  In this connection, an earlier post discussed how permitting COI violations near the top of an organization can undermine the sense of “organizational justice” among employees generally – and thereby diminish the C&E program as a whole.

C&E-related culture also commonly refers to the culture of a given geography.  For instance, as this prior guest post by Judith Irwin of the Institute of Business Ethics describes, in some places what is considered a COI by Western standards might be seen an ethical mandate in other places.  (“Take the example of nepotism in Africa. In Africa, where family bonds are highly valued, nepotism is a common practice, and an employee may face ostracism for not hiring a relative for a position at the firm.”)

But there is also a third dimension to the intersection of culture and C&E that is too often overlooked: industry culture.

An example of this unrelated to COIs is that in the chemical industry some years ago there seemed to be a culture that encouraged sharing of information among competitors.  This contributed, predictably,  to a high incidence of antitrust violations.

And, industry culture can be relevant to COI risks, too.  For instance, the advertising business (at least in the U.S.)  is one in which gift giving/entertaining is pretty prevalent and so even an organization that has strong COI policies may wish to devote extra C&E-related attention to its employees (typically in marketing or procurement) who interact with members of that industry. (The Wal-Mart ad agency case from a few years back – discussed briefly here  – offers a pretty good lesson in how important that can be.)

Beyond the COI risks that industry culture can create in a company’s functions (as in the advertising example) culture can be risk causing vis a vis distinct business lines or units within a company, particularly a large decentralized one. So, for example, a large energy company whose principal business is a regulated utility that needs to maintain the trust of key regulators should be mindful of  the reputational danger of a casual approach to COIs in its unregulated subsidiaries. (Note that this sort of situation can also involve “moral hazard” –  a topic of occasional discussion in this blog.  Specifically, the risks of adversely impacting the interests of the organization as a whole might not be fully felt by the risk-taking unregulated business.)

As a general matter industry culture is not as significant a cause of risk as organizational or geographical culture.  But it can be potent, particularly in industries with a high degree of inter-company mobility, such as financial services.  And,  industry culture should be considered in all organizations’ COI risk assessments.

 

Gifts between employees

As a matter of etiquette, there are various types of gifts that one should never give to a boss or other colleague.  Here  is a list of eight such gift types (including “adult” items and cash).

Virtually all corporate codes of conduct have limits or guidance concerning employees receiving gifts and entertainment from those doing or seeking to do business with the company.   Most (but not all) codes also seem to address employees giving gifts to third parties – particularly actual or potential customers.   But much rarer in codes are discussions of purely internal (i.e., employee-to-employee) gift giving.

Of course, the risks of a significant conflict of interest arising from this sort of gift giving are presumably less than in   either of the external contexts, at least as a general matter.  But one can readily envision situations involving actual or apparent conflicts based on internal gift giving, and one does occasionally hear of gifts in this context that clearly “cross the line,” even if no line is explicitly drawn in a company’s code.

So, as with any C&E standards, it may be best to be explicit, for instance, by providing  in a code or COI policy document that gifts between employees should:

– be consistent with the spirit of the company’s COI policy,

– be otherwise appropriate to the situation, and

– not be – or be likely to be seen as – an attempt to influence the recipient’s business judgment.

Soliciting gifts can also raise ethical issues, for instance, if a supervisor lets those in his work unit know when his birthday is, in a way that suggests that something be done for the occasion.  While I’ve seen this before (involving repeated reminders about the individual’s birthday), I don’t think it is common enough to warrant mention in a code.

Finally, in the public sector these issues can be even more significant – as evidenced by this story  from a few years back about a loan made by Chris Christie, then a prosecutor, to a colleague in his office who, by some accounts, was in a position to use her position to help his campaign for governor (although both the colleague and Christie denied this was the point of the loan).

 

Global Challenges in Addressing Conflicts of Interest (Part One)

By Lori Tansey Martens

Part I of this blog post will  deal with the challenges that firms may face when implementing conflict of interest policies and programs around the world.  Part II will present approaches and strategies to mitigate many of these challenges, in order to increase adherence to company standards.

 Perhaps the biggest challenge faced by most “westerners” when navigating conflict of interest challenges around the world is that they have a hard time understanding that the rest of the world doesn’t always think like they do, nor share their value systems.   In fact, many cultures do not subscribe to the belief that the business world is better off with impartial, ‘arms length’ relationships. 

 Yes, you read that correctly. Many societies including parts of Asia, Africa and the Middle East, actually believe that developing close relationships is the most important factor for success in business (and, frankly, in life as well.) Activities that foster close relationships are, therefore, seen as positive and ethical, even if they may meet the West’s definition of a conflict of interest.

I remember conducting an ethics workshop for a major multinational company in Africa.  We presented a conflict of interest scenario about hiring a brother-in-law as a supplier, but the participants were aghast at the “correct” answer, which was not to hire the family member’s firm.  “It is unethical for me NOT to hire my brother-in- law if he is qualified – and he will do a better job for my company because he is my brother, and therefore more accountable to me,” said one participant, summarizing the feelings of the entire group.

Now, I’m not suggesting that companies adopt the value systems in other cultures, but understanding the perspective of employees in other parts of the world is imperative to successfully implementing your own conflicts of interest policy.

Asia

In many Asian cultures, business has been conducted for centuries by family members with other family members, so the idea of “arms-length” makes little sense to many employees.  In fact, over 70% of businesses in Asia are family-owned, and even many of the large multinational corporations throughout Southeast Asia are connected through extended family ties. 

Additionally, in Asian cultures, social reciprocity is an important cultural tradition. In Chinese cultures it is known as “guanxi,” while in Japan, it is known as “kashi” and “kari.” These are best described as “favors” one party does for the other to build a relationship, and they are considered serious social duties.

In many instances, guanxi may be the only way to find scarce resources, trusted suppliers or a route through government bureaucracy. Lyman Miller, director of China Studies at Johns Hopkinʹs Paul H. Nitze School of Advanced International Studies, said of guanxi: ʺTo some Americans, it may seem mildly like corruption or insider dealings, but in China, itʹs the natural way of doing things. Everything is done through connections. Things that weʹd blanch at are standard operating procedure over there.ʺ

Africa

Historically, in many African countries, the moral responsibility of the individual was to contribute to the happiness and welfare of their individual family and their tribe.  The concept of social reciprocity also exists in African, albeit in a somewhat modified form from the Asian concept.  In parts of Africa, reciprocity goes more to the need for mutual assistance and aid, as expressed in the African proverb, “the right arm washes the left arm and the left arm washes the right arm.”

Middle-East

The business community in many Middle-Eastern countries can be small and, like other regions discussed, has traditionally been based on family. Depending on the country, it is likely that employees will face situations in which the only supplier for crucial services or supplies, or even the most qualified candidate for job openings, comes from a related party. Cross membership on boards is also common, sometimes even among competing organizations. And parts of the Middle-East can be particularly sensitive to the perception of “cultural imperialism,” resenting the imposition of Western values over local culture and customs.

 Europe

Many American firms can be surprised by the strength of attitudes toward personal privacy and the marked separation between personal and business life, which in some cases is supported by employment law in Europe.  While many American employees are used to lengthy conflict of interest disclosure forms, which ask about family relationships, financial holdings of family members, personal and professional associations, some of these questions will be resented by European employees as an unnecessary intrusion into their family and private lives.

In my next post, I’ll detail some strategies global companies can employ to navigate these challenges and successfully implement a conflicts of interest policy throughout their operations.

 Lori Tansey Martens, a 20-year veteran in global business ethics, is the President of the International Business Ethics Institute.  The Institute helps companies develop effective global ethics and compliance programs.  For more information, please visit www.business-ethics.org

 

Special Super Bowl Edition of the Conflict of Interest Blog

While the NFL’s code of conduct for fans doesn’t mention COIs (it is more about not throwing objects on the field.) the Super Bowl is a perennial source of COI issues.  Indeed, Super Bowl tickets received by a US Secretary of Agriculture from a company his department regulated played a central role in a major COI prosecution in the 1990’s – although the Secretary was acquitted and the company’s conviction on a related matter (involving US Open tickets, among other things) was overturned by the Supreme Court.

The case evidently didn’t put an end to government officials getting Super Bowl tickets from those with whom they have official business.  As noted in this post last year by Judy Nadler, senior fellow in government ethics at the Markkula Center for Applied Ethics: “I spoke with a reporter recently who was writing about gifts elected officials were taking but not disclosing. More troubling, many of the officeholders said they ‘couldn’t remember’ whether or not they had gone to the Super Bowl courtesy of a major business interest.”  (Easy to see how one could forget that!)

More common, though, is a business providing Super Bowl tickets to individuals in the private sector, particularly to customers.  Indeed, Super Bowl tickets are frequently the subject of discussions in codes of conduct.  For instance, the Home Depot’s code provides, in relevant part: “In the event that the recipient is willing to pay face value for a ticket or other gifts and entertainment, when in fact the market value is significantly higher than the face value (e.g. Super Bowl or Masters Tournament tickets), the associate must still have the item approved in advance in accordance with this policy.”

As with many COI issues, the devil is in the details regarding the propriety of giving or receiving Super Bowl tickets, and here are a few questions to ask in deciding whether to give:

-Would someone from your company attend the event with the potential recipient or would it be an out-and-out gift?

– What does the recipient’s company’s policy say about gifts and entertainment?

– Does the recipient’s supervisor know about the offer?

– What is the function of the proposed recipient in her company?  (Purchasing, of course, is most obvious from a risk perspective, but others – e.g., an external auditor or even supplier in some instances –  could raise COI risks, too.)

– What is the state of play in terms of new/existing business with the recipient’s company?

– What other costs  (e.g. air travel) would be borne by your company in connection with attending the event?

– Is the recipient an employee of a government agency (including a state-owned enterprise)? Even if not, do they do business with the government – which, in some instances, might be risk causing at least from a reputational perspective?

Finally, two questions about process:

– Is the decision of whether give or not to give reviewed by the compliance officer or other function (e.g., law department) that is independent of the part of the business proposing the invite?

– Are the bases for decisions sufficiently documented?

But, all this is for next year. For now, just enjoy the game!  And, go Giants!  (Disclosure: I’m from NJ.)