I recently posted an opinion that I believe that ethics is a matter of culture. Following is an example of a case that we worked that would support this theory.
We were asked by a U.S. client to conduct an investigation into allegations that an individual from one of their foreign subsidies was taking a kickback from local suppliers. We conducted an extensive investigation, which included, among other things, speaking to a number of suppliers and potential suppliers that had participated in open bids in the past. What we determined was that every one of the suppliers and potential suppliers had been required by the requesting departments to pay a kickback to the head of the requesting department in exchange for being granted the contract. According to one of the suppliers, the practice was so ingrained in their culture that they always included a 5% plus in their proposals to cover the kickback.
We were asked by the client to present our findings to the local country manager, who claimed not to be aware of the situation, but also failed to show a great deal of surprise upon learning of the events. The country manager thanked us for our investigation, stating that they would discuss internally how to proceed. We also submitted our final findings to the company’s headquarters in the U.S., who reacted in a totally different manner.
A few days later, we received a call from the contact at the company headquarters asking us to support one of the Vice-President’s of the company, who would be arriving the following morning. After explaining our findings, we accompanied the VP and a local attorney to the office where they summarily dismissed the country manager and every single head of department at the local subsidiary. All told, more than 20 employees were dismissed that afternoon, with many more placed on notice. In absolutely all cases, every one of the employees was surprised to have been dismissed.
In every case, the employee stated that they had not taken, nor would ever take one dime from the company. Further, they claimed to have negotiated the best rates for the client, always selecting the lowest bidder. And they saw no ethical dilemma in having accepted money from the supplier. In many cases, the employee stated to have sought out the supplier, and the money paid back to the employee was simply a finder’s fee for connecting the company with an excellent supplier, and vice-versa. Several begged to be able to keep their positions, claiming not to comprehend the reason for their dismissal.
It took a while for the company to get back on their feet again after firing every one of their local managers and many other key positions. Interestingly, the company did not learn its lesson. They continued to roll out their ethics program without ever explaining the company’s definition of what is ethical and what is unethical. They simply had all employees watch a video and sign a document stating that they would operate in an ethical manner. Not surprisingly, the client called us back about two years later after receiving another complaint from a potential supplier who had been asked for a kickback. In spite of the prior dismissals and differences in corporate ethics, it was back to business as usual.