JULY/

AUGUST 2017
Vol. 31 | No. 4
THE JOURNAL OF PRACTICAL BUSINESS ETHICS

A PUBLICATION FROM THE SOCIETY OF CORPORATE COMPLIANCE AND ETHICS

Cyber security crisis:

From the front lines
of corporate law
page 1

What the U.S. Army

can teach business
organizations
about ethics
page 6

corporatecompliance.org/ethikos
 Can ethics be monitored?
BY ROBIN SINGH

W
hat is ethics?
There is no standard definition of the word ethics.
The Macmillan Dictionary describes ethics as a set of
principles that tell people what is right and wrong. This is remark-
ably similar to the definition for morality, except that morality is
about what society considers to be right and wrong. Ethics is more
personal, and because every person thinks differently, his/her ethics
could be different from the next person.
But broadly speaking, it is about putting others first, above self.
Professional/workplace ethics is easier. There wouldnt be many
people, if any at all, who think it is ethical for a doctor to prescribe
the drugs of a manufacturer that pays for his vacation. For a lot
of business practices, high ethical standards are accepted by many
without question, mostly because they agree with the personal
ethics of the people concerned. Corporate ethics are the hardest,
because both ends of the spectrum could agree with ones own
personal ethics. For instance, some might think it is alright to do
business with a firm located in a country that is politically opposed
to the country where the organization is located. Others might feel
it is politically incorrect, and hence unethical. Yet others might
hold views that fall somewhere in betweenthey might think it
depends on the nature of goods/services involved.

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The role of perception
Perception is one key element which can make
or break the ethical barrier. Perception is like
the smoke before the fire in a pile of wood.
For instance, if employees perceive a CEO to
have loose character, then that could be detri-
mental for the company and team as well. On
the other hand, if a CEO is perceived to be a
person with character, they will be seen as a
person with ethics and that will be beneficial
for the company and the companys sharehold-
ers. In the end, a simple perception can make
or break a persons viewpoint toward another.
The role of a compliance officer to
monitor ethics
There is no point to talking about ethics if
they are not going to be monitored for com-
pliance. The latter is otherwise known as
walking the talk and a full-time compliance
officer is necessary to ensure this.
20 July/August 2017 ethikos This article appears with permission from the Society of Corporate Compliance & Ethics. Call +1 952 933 4977 or 888 277 4977 with reprint requests.
In some sectors, like the pharmaceutical
and/or life science industries, ethics is of the
utmost significance. Ethics are closely tied to
regulations that govern research, and a com-
pliance officer ought to be well-versed in all
aspects of the company and also where pos-
sible breaches of the regulations are likely to
occur. It would be the compliance officers job
to communicate the organizations key ethics
principles and organize periodic training ses-
sions so that everyone knows what is expected
of him/her at work.
Compliance officers must, therefore, be
people of integrity as their job would require
them to review others work. They need to
have a keen eye for detail so they are able to
notice violations and possess excellent inter-
personal and communication skills. They must
not be willing to let their professional working
relationships take precedence over the compa-
nys code of ethics.
Compliance program is the key for
guiding ethics
A compliance program must list out which are
the ethical guidelines to be followed. It must
also identify possible breaches and the penal-
ties associated with each violation.
The point is to build ethics into the com-
pliance program. The compliance program
should outline who is responsible in case of a
breach. At ethical companies, managers will-
ingly take responsibility for any shortcomings
in compliance within their business unit. They
realize it is their job to ensure compliance
by their subordinates. The more ethics are
included into the compliance program, the less
of a burden it will become on these managers
 and others who are placed in charge of com- By itself, a well-designed compliance pro-
pliance. This happens as the right decisions are gram would ring the alarm bells even before
always taken every time, with respect for both the ethics compliance violation occurs. This
people and processes. requires a thorough understanding of pro-
Ethical companies also make it possible for cesses at the organization when framing the
employees to anonymously report violations compliance program. If anything is headed
of the code of ethics at the workplace. This is on the wrong path, the senior management
part of the compliance program and makes it can step in and set things right before any
easier to take remedial action before things get damage is done.
out of hand.
Thought leaders propose two varied lines How to ingrain ethical culture
of thought when it comes to internal report- Good organizations realize that it is their
ing in a compliance program. One thought is, employees, not regulations, which drive the
should reporting be optional, giving a person company forward. They lay as much emphasis
a choice to report? The other line of thought on ethics as skill upgradation.
suggests making reporting mandatory, where a The only way to ensure that a culture of
person must report a witnessed unethical act, ethics is ingrained in the minds of the employ-
fraud, or misconduct. ees is for the top leadership to set an example.
Does it make a difference? Well, in my When senior executives practice ethics, it has
opinion, it is not the line of thought, but the effect of percolating down to the lower
rather doing the right thing. layers. Some companies dont leave it to their

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 compliance officers to conduct training work- but water, sugar, and chemicals. Instead of
shops on corporate work ethicsthey have withdrawing the product from the shelves,
their senior managers do it themselves. This he chose to let the status quo continue. An
sends the message out loud and clear that the FDA investigation led to the company being
organization is one which stands for ethics. fined $25 million for mislabeling and adulter-
Anyone who wishes to be a part of the com- ation. The profit they stood to make was only
pany must follow the code of ethics that has $700,000 at the time. Beech-Nut subsequently
been laid down. No one is exempt, be he the went out of business.
chairman or the doorman.
To further reinforce this, the conse-
quences of not being ethical are informed
to every employee at the time of joining.
Companies could do well to build a culture
where those pointing out possible breaches
are not victimized in any way. Those who
engage in unethical practices are also not to be
rewarded, even if those result in revenue for
the company.

Ramification on compliance officer and the

CEO for not monitoring ethics in the eyes of
the stakeholder
It is the responsibility of the compliance offi-
cer to work closely with business units within
the organization to put in place appropriate
contingency plans in the event of a breachif
word gets out, it could result in the company
being censured by regulatory authorities.
The loss to the share value notwithstanding,
fines imposed may amount to millions of
dollars. This is why the compliance program
is headed by a Chief Compliance Offi-
cer at large institutions. The CCOs role is
such that even the members of the Board
are not exempt.
At Beech-Nut, the CEO discovered
that the concentrate used by the company
for its 100% pure apple juice was nothing
If an organization is not ethical, it will not
have customers. It will also lose the respect
of its peers in the industry; and over the long
term, it will find itself struggling to survive.
The CEOs job is to review the code of ethics
periodically and make changes as necessary, in
tune with the changing business environment.
One cannot monitor individuals ethics but can
develop a framework for employees to operate
by a code for which a management plays a
key role to set the right tone at the top. n
Robin Singh (robinsingh002@yahoo.com) is Senior
Compliance & Fraud Control Officer at Abu Dhabi Health
Services Company in Abu Dhabi, UAE.

22 July/August 2017 ethikos This article appears with permission from the Society of Corporate Compliance & Ethics. Call +1 952 933 4977 or 888 277 4977 with reprint requests.