by Carrie Penman, Vice President of Ethical Leadership Group, a Global Compliance Company

Many may remember the character Rosanne Roseannadanna from Saturday Night Live. The late Gilda Radner played the confused news reporter who always mixed up the wording of an issue. She ranted on about her confused issue until someone finally corrected her. At that point, she always ended her remarks with a quiet “Nevermind…”

Well, that is what I felt like today listening to the press conference given by the new Secretary of the Interior, Ken Salazar, at the White House daily briefing. He gave a lengthy statement about the ethics scandals that rocked his organization, the investigations he was planning to conduct, and the corrective actions that would be implemented. He stated his commitment to ethics and accountability and related these efforts to President Obama’s focus on issues of integrity and accountability in government. Then he opened the floor to questions from the media.

The first question, the second question, and then the third question were about things like the agency’s plans for offshore drilling. Huh? Even the Secretary looked confused. He was prepared to answer questions about ethics and doing the right thing. After all, he had just discussed the juicy issues the media loves to cover – sex, drugs, and inappropriate relationships with the companies the government is supposed to regulate. It wasn’t until the very last question that a member of the media finally asked him about his actual remarks.

Why is this? I was already amazed this week at how Illinois Governor Blagojevich became a rock star on the major networks that helped him spin his story. Good Morning America, The View, and Larry King Live gave him plenty of air time. Joy Behar even played with his hair!! Has everyone, including the media, given up any hope of ethics and accountability really happening in government or the private sector? Is it just becoming a big joke? Is the media accepting this stuff as status quo? Is it just how business is done??? Or is it, as Rosanne Roseannadanna would say, always something?

What’s all this talk about ethics? I must be mixed up. Nevermind.

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by Steve Priest, President of Ethical Leadership Group, a Global Compliance Company

This is a terrific day for America. E pluribus unum indeed.

That’s enough basking. True to the spirit of President Obama’s speech, let’s get to work. No work in America—or the world—is more important right now than business ethics. We face a financial crisis in large part because of a failure by many—lenders and borrowers and those who aided and advised them—to take responsibility for making prudent choices.

And our crisis continues because now we have a lack of trust. Lenders and investors and suppliers don’t know if they can trust the person or company on the other side of the transaction. And without trust, the economy grinds to a halt.

As ethics and compliance professionals, our ultimate job is to build trust. President Obama gave us at least two lessons today on how to do so.

First—deliver the bad news. It was striking how direct our new President was about the difficult conditions we face. Many business leaders choose to give only positive messages, and when they deliver bad news, others are to blame. President Obama didn’t blame solely the greedy and irresponsible for our economic state—he assigned responsibility to all of us.

Second, he focused on the values we share as a way to bind us in pursuit of a common objective. Consider these words from the Inaugural Address. Substitute “company” or “organization” for “government.” Think about how messaging consistent with this might serve your organization—and your ethics and compliance program—in the weeks and months ahead.

"For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. . . . Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends - hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism - these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task."

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by Steve Priest, President of Ethical Leadership Group, a Global Compliance company

As you all know, Governor Rod Blagojevich (D) of Illinois was recently arrested for his “political corruption crime spree.” He is captured on tape putting the US Senate seat of Barack Obama and the editorial board of the Chicago Tribune up for sale.

His behaviors indicate that he is corrupt, stupid and unrepentant.

This seems to be a pattern in Illinois politics. Governor George Ryan ® before him, now in prison, never seemed to “get” why what he did was wrong. And we have a legacy here in Illinois. In the last fifty years, two other governors were convicted—Otto Kerner (D) of bribery, conspiracy, income tax evasion, mail fraud and perjury; and Dan Walker (D) for misuse of funds.

This pattern got me to thinking about an ethics consulting service we recently launched: Ethical Leadership Coaching. Under the pressure of today’s business environment, some leaders slip. They fail to “talk the talk” or “walk the talk.” Businesses face a tough choice when this happens. They can fire the leader and lose a performer and an investment. This is often the only right course of action—and our experience is that companies often don’t fire people when they deserve it.

However, sometimes the sinning leader is slightly clueless. He or she may not be aware of what exactly he or she is doing wrong. Mary Bennett, who has been part of our team for almost ten years, is a trained coach with deep ethics, compliance and business experience. She can take leaders with the desire to overcome past bad behaviors and coach them in order to help them achieve their potential—and contribute to the firm’s profitability.

But she can’t work miracles. We are not accepting applications from any Governors of Illinois, past or present. Governor Blagojevich, we can’t help you.

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by Steve Priest, President of Ethical Leadership Group, a Global Compliance company

I’m Steve, from Illinois, and I’m an ethics consultant

This used to be an introduction, not a laugh line.

I am almost at a loss for words. But here are a few:
“I was born and raised in Wisconsin, and that is a clean state.”
“I travel a lot.”
“I’d rather live in the mountains, where the air is clear.”
“We’re not as bad as Louisiana—yet.” (Actually, I am not sure about this last one.)

When my head clears and my amazement diminishes, I will have something more profound to say. Right now I am in the state of my son Michael, who sent an email yesterday morning as the news was breaking saying

“How could he have been so stupid?”

Right. When the voters of Illinois re-elected Rod Blagojevich, we knew he was slimy. We didn’t like him. But the alternative was worse—reminded us of the also slimy previous Governor of Illinois, George Ryan, who is now in prison for corruption. But we didn’t think he was corrupt and stupid.

The whole world has known the Governor has been under investigation for years. And yet—and yet—well, you have read the papers. You know what he said.

The feds called it a “political corruption crime spree.”

I guess I’ll call it an opportunity. The next time I am in India or China or another country with the reputation for corruption I’ll just say “I am not here to cast stones. I am an ethics consultant from the state of Illinois….”

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by Steve Priest, President of Ethical Leadership Group, a Global Compliance company

Yesterday Senator Ted Stevens of Alaska was found guilty on seven felony counts. He failed to disclose gifts and services of approximately $250,000 largely used to renovate his home.

Like most Americans I hate the fact that senators, congressmen (and women???), governors, state representatives, alderman—politicians in every conceivable role and both parties—take things they shouldn’t. Or at least don’t disclose things they should.

But since the focus of ELG is on organizational ethics and compliance, let’s look at the other half of the equation. What about the people who provided the gifts and services?

The most valuable gifts and services provided to Senator Stevens involved remodeling and furnishing his Alaskan home. The remodeling was largely done by employees of VECO Corporation. According to the charges, this remodeling occurred over six years, and included:

• building a new first floor
• installing a new electrical system
• installing a new roof
• adding a wraparound deck
• installing a rope lighting system
• installing kitchen appliances
• repairing many parts of the home.

This renovation work, as well as other gifts, was approved by the then Chairman of VECO, Bill Allen. Both Mr. Allen and a VP have pleaded guilty to bribing Alaska state legislators but have not yet been sentenced. Their testimony in the Stevens case may help them reduce their sentences, but they almost certainly face time in prison, as does Senator Stevens.

Always hoping for innocent mistakes rather than calculated wrong-doing, I looked up more information on VECO in hopes that Allen and his VP perhaps were naïve and did not know what they were doing was wrong. Unlikely. VECO was a sophisticated global company with over 4,000 employees. They knew the rules, and thought it would be in their best interest to violate them, at least with Alaskan government officials and Senator Stevens.

Could anything have stopped them—or at least ended their bribery earlier? Sometimes bribery is hard to discover. It is usually conducted in secret. Bribers and recipients try not to leave trails.

In this case, however, a number of VECO employees conducted the work on the Senator’s house. It is impossible that they did not know whose home it was. It is improbable that the neighbors’ eyesight failed. It is extraordinarily unlikely that a firm like VECO—whose main business was oil field services—would be doing commercial home renovations.

Yet these renovations started in 2000—and lasted until 2006. Where were the whistleblowers?

This exposes one of the biggest risks that privately held, family-managed companies face. When the wrongdoing is directed or approved by a member of the family that owns the place, where are you going to report an issue? Who is going to make that call?

One would like to think it is different in publicly held companies, but in our focus groups we have heard the same concern. “Why should I make a report when I believe the people at the top already know?”

An active Board of Directors with a visible, independent profile is one key mitigating step. Many privately held companies prefer not to have one, but this is the only internal resort for employees in companies like VECO. These boards, like their publicly traded counterparts, also need to provide an anonymous reporting channel for employee concerns to go directly to them so they cannot be filtered by members of management. This does not have to be a hotline on every board member’s desk. It can be the standard helpline, with an inviolable protocol established with the provider: calls of these (defined) types or about these people go directly to Board member Y.

Would such a system of governance and reporting have saved VECO? Perhaps not. We don’t know whether employees had been trained about the issue and their reporting obligations, and we don’t know anything about the VECO culture. But it certainly might have made a difference, and can in many other organizations.

The cost of the bribery scandal is obviously high for a number of individuals. Including Mr. Allen’s family, who have had to live through this with him, and will suffer his loss when he goes to prison. And including the employees of what used to be VECO. For, as is so often the case, VECO is no more. In 2007, in the wake of the scandal involving Alaskan officials, Mr. Allen’s daughter sold VECO.

Do you think the family got as much post scandal as they would have before? Do you think employees felt as secure afterwards? At least they were acquired by a very reputable company (CH2MHill), but the change had to be painful no matter what.

I’m not crying for Senator Stevens or Bill Allen. But it is too bad that ethics and governance failures cost so many innocent people so much. I’ll revisit that theme as I explore the financial services meltdown over the next few months.

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Primaries, caucuses, polls, comebacks… it’s a presidential election year and for ethics and compliance officers that means a long list of potential risks and challenges. A recent article in the Wall Street Journal detailed the efforts that campaign staffers are making to “bag trophy supporters” - influential executives who will fund raise and publicly work on the candidates behalf. To me, the article was one red flag after another and it got me thinking about specific steps that ought to be taken to head off embarrassing incidents or worse.

To begin, this is the perfect time to review your Code and policies to make sure they’re clear and up-to-date about contributions and campaign financing. These issues are complex and can vary from state to state. Email reminders to employees, especially senior managers, reminding them of the rules and encouraging them to ask questions if they’re in doubt is probably a good idea. This is especially important if you’re a government contractor or if your company or industry has a PAC.

But beyond campaign financing, sometimes employees are unclear about the limits on using company resources for political activities. Most have no problem making the easy calls: it’s not OK for an employee to make copies of campaign flyers. Emails to clients or customers urging them to support a candidate would be clearly wrong. But what about some of the tougher calls? For example, do you allow use of company facilities for rallies? Do you make exceptions if the rally focuses on particular issues – like healthcare, energy or defense – that are directly related to your business? Do you make exceptions if your CEO or a senior executive is a supporter? Which brings me to another set of problems.

What if a senior executive hosts a fund raiser and encourages peers and subordinates to attend? Does it matter if the event is off site and after hours? What constitutes inappropriate pressure? What happens to those who decline? How would you respond to a complaint from an employee who feels he is being retaliated against by his boss ever since they discussed their political preferences? Is there anything you can or should do if your CEO or a senior executive chooses to publicly support a controversial candidate?

Most companies prohibit employees, without clearance, from speaking on behalf of the company and publicly endorsing a candidate, but what do you do if a sales associate insists it’s her right to wear a candidates’ button when visiting customers?

The issues can be most difficult when a senior executive is an enthusiastic supporter. In the worst cases they see their choice as the only reasonable one and can’t understand how anyone could disagree. If asked, they often won’t see their advocacy as unacceptable pressure on subordinates or as creating tensions in the workplace, instead they’ll defend it as their right and even their public obligation. If you’re faced with a tough challenge like this, remember there is good news: there’s only eleven more months to go.

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