Does Compliance Need More “Darkside”?

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RichardBistrong-picture-small-768x1024By Richard Bistrong
richardtbistrong@gmail.com

Since my release from the Federal Prison Camp in December 2013, I have been observing many different perspectives in the compliance discourse that have broadened my own understanding of “compliance”. From the fields of law, audit, and investigations (to name a few), comes a stream of well-­‐experienced and relevant viewpoints that from my own front-­‐line familiarity, are essential to those who work in remote offices far from the C-­‐Suite, and who confront risk in their work. My appreciation to the SCCE, where I joined last spring, for being such a tremendous place from which to engage, and I have enjoyed the opportunity to speak individually with a number of contributors.

Given the current rising tide of anti-­‐bribery enforcement actions, investigations and upcoming trials, what could be missing from what is indeed a robust debate, complete with detailed analysis of “what it all means.” To answer that question, I refer to Dr. Roger Miles, Behavioral Risk Lead, Thomson Reuters, who stated in a White Paper, Risk Culture and Conduct Control: Time for a More Enlightened Approach:

“Shouldn’t the designers of financial controls spend some time looking at the dark side? Instead of regulating by defining and enforcing some formulated version of normal behavior, a better approach for supervisors seeking to regulate conduct might be to identify the pathologies of “bad behavior.” What are its warning signs, its leading indicators? Can these be found in financial reports? (Hint: No, they cannot). Where do we need to look?”

Indeed, bribery is a crime of behaviors, where at some level, the “giver and taker” have calculated that the benefits of corruption outweigh the risks and consequences of getting caught.  As Matteson Ellis stated in How to Pay A Bribe (Wrage, 2014), “corruption is a crime of opportunity. People pay bribes by exploiting weaknesses.” So why not take a dive into the “dark side,” and see what well educated and compensated employees are thinking when they risk their own liberty (as I did), to engage in corruption, even in what is referred to as “petty corruption.”

How? There exists a rich field of organizational and behavioral research that speaks to why people cross over to unethical decisions, and to how there is great opportunity to impact thinking before it becomes conduct. As I read this research, I often have moments of “that was I,” and I see great relevancy to this field. While this post is not a book review, a great place to start is with Professor Francesca Gino (Harvard) in Sidetracked, Why Our Decisions Get Derailed,” which I wave around at every speaking engagement.

The opposite side of compliance is indeed the dark side, and it’s not a pleasant place. But if we take a deep-­‐dive into those thoughts, calculations and rationalizations, then don’t we have a better chance to “fix what we know,” and to provide more enlightened support to those who might be struggling with ethical decisions, by tipping them “to the right side.”

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March 16, 2015: Guest Blog Post to SCCE. © Richard T. Bistrong

2 COMMENTS

  1. Richard, an interesting perspective, one which resonates with me as a forensic accountant. When I am asked to either reactively investigate or proactively assess anti-corruption compliance, I first consider the ‘modalities’ of corruption I’ve seen or heard of. These vary by industry, geography, or perhaps by control environment. So I know where to start, if for example I’m asked to look into activities of the logistics department of the sub of a manufacturing entity on a remote Indonesian island or, say, at the marketing arm of a consulting business in Kiev. And no, more often than not I am not starting by looking at a top-level financial statement. Contrary to recent punditry, financial anti-corruption controls have next to nothing to do with Sarbanes-Oxley-style controls over financial reporting. See you in class!

  2. Hi Pete and thank you for your comments. Looking forward to continuing the conversation on the 20th!

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