Money. Secrecy. Foreign officials. “Greasing palms.“ Bribery.64 That’s the dirty little secret about doing business globally that managers at multinational companies don’t want to talk about. It’s illegal for U.S. companies to bribe foreign officials as the Foreign Corrupt Practices Act (FCPA) states. The FCPA resulted from Securities and Exchange Commission investigations in the 1970s in which over 400 U.S. companies admitted to making questionable payments (some $300 million) to foreign government officials, politicians, and political parties. One major example: Lockheed officials who paid foreign officials to favor their company’s products. The FCPA, which prohibits bribery of foreign officials, was meant to re-establish the public’s trust in the honesty and reliability of American businesses. With the passage of the FCPA, the United States became the first country to explicitly outlaw the practice of bribery.
Recently, however, managers at the world’s largest retailer were sent reeling by allegations of bribery in Mexico to accelerate the company’s expansion there. An investigation by a reporter for the New York Times claimed that Walmart’s Mexican subsidiary paid $24 million in bribes to local officials to speed up the granting of permits to open new stores. The investigation also alleges that when evidence of the bribery’s vast scope was presented
to senior management in the United States, they shut down the probe. As the scenario unfolded, however, the company’s board of directors reported that the audit committee was “examining possible violations of the Foreign Corrupt Practices Act and other alleged crimes or misconduct in connection with foreign subsidiaries . . . “ This was the first public disclosure by Walmart that the internal inquiry could possibly involve additional subsidiaries.
What started as a high-profile corporate espionage case turned into an enormously confusing, bewildering, and embarrassing mess for French car bribe—supposedly for information related to the cost of the company’s electric car. According to CEO Carlos Ghosn, this information was critical economic data that could give competitors insight into the car’s technology and its costs. Renault’s chief operating officer, Patrick Pélata, launched a four-month internal investigation that led the company to conclude that “it was the target of a system organized to collect economic, technological and strategic information to serve interests abroad.“ A company spokesperson also said that the company’s compliance committee was alerted to possible unethical practices involving three employees. Renault then lodged a criminal complaint of “organized industrial espionage, corruption, breach of trust, theft and concealment“ and dismissed three executives who worked on its electriccar program for allegedly leaking information in exchange for money. Ghosn said the company’s actions were taken to protect the company. He declared on a French evening news program on January 23, 2011, that Renault had plenty of proof and that they were absolutely certain that the three employees had passed company secrets to outside sources. The affair also caused tension with Beijing after then-French president Nicolas Sarkozy ordered an investigation into whether China was involved in the espionage. But the story takes an interesting twist here as these three men repeatedly denied any wrongdoing and asserted their innocence from the beginning.
Doubts began surfacing about the alleged spying when the Paris state prosecutor dismissed charges against the three fired executives for lack of evidence. That’s because the three were, in fact, innocent. Renault, for the first time, began suggesting that the company may have been “tricked“ into bringing the allegations against these men. Then, French prosecutors began trying to figure out whether someone had engineered the entire affair as a way to defraud the company. The French police had not found any foreign accounts into which the three executives were said to have deposited their spying proceeds, but they did find accounts in Spain and Dubai holding some of the money that Renault had given Dominique Gevrey, an employee in Renault’s security department who led the internal inquiry
against his three colleagues. He was arrested while trying to leave the country boarding a flight to Guinea in West Africa and accused of concocting the spying allegations. The audit committee of Renault’s board of directors also launched an investigation. It concluded that executives had committed a series of missteps after the company received the anonymous espionage tip. One was that the security department’s investigation was deliberately hidden from Renault’s board and audit committee. It also said that it had been a mistake for the company to pay out 200,000 euros ($290,000) to obscure firms for “imprecise purposes“ in connection with the investigation into the alleged espionage. The audit committee also concluded that the three Renault managers accused of spying had been fired without an opportunity to respond to the allegations. At a specially called meeting, the board took the following actions: accepted the resignation of Patrick Pélata, Renault’s chief operating officer, although he is being reassigned to Renault’s alliance with those of Japanese partner Nissan Motor Company; dismissed the head of human resources, the head of the legal department, and the secretary general; fired three security officials, including Dominic Gevrey; asked for a complete redesign of the company’s security department, hiring expert consultants from around the world; reinstated one of the wrongfully terminated employees and reached settlements with the other two; called for creating a company ethics committee and restructuring its compliance committee.
Diversity management is the bottom line at professional services company, PricewaterhouseCoopers (PwC).66And the company’s commitment to diversity puts them at the top of the list for Top Companies for Diversity as determined by DiversityInc. So what does a company do to be recognized as the number one company for diversity management? Well, it starts at the top. in the middle of the night because you’re a foreigner—you get a different perspective.“ In addition, his work team included individuals from France, Australia, and the United Kingdom, as well as from Japan. He soon recognized that people from different cultures approach problems with differing perspectives—that his way wasn’t necessarily the right way and certainly not the only way. That’s why now as the company’s top executive, he realizes that to help his company succeed in today’s global economy, an inclusive culture that attracts and retains diverse talent is critical.
PwC also has several diversity programs and initiatives in place. The company’s first chief diversity officer (CDO) was appointed in 2003 and, like at many organizations, was first “housed“ in the human resources department. Now, however, the CDO reports directly to Moritz, giving the position credibility and, more importantly, accountability. Another interesting thing about PwC’s CDO position is that it is rotating—that is, partners are rotated in and out of the role every two years. Currently, that position belongs to Maria Castanón Moats, an audit partner who recently was named CDO.
Another diversity commitment that PwC has made is to talent development. Professional services companies, like PwC, prosper or fail because of their human talent. PwC has made it a priority to “find, engage, and promote the best and brightest employees, especially those from underrepresented groups.“ To attract such outstanding diverse talent, the company offers employees an enviable array of benefits. Because work at professional services companies can be arduous and demanding, PwC has looked for ways to offer its employees work/life flexibility to deal with personal and professional challenges. Some of the benefits it offers includes backup childcare assistance, paid paternity leave, nanny resources and referrals, onsite religious accommodations, well-being rewards,
and tax equalization for all domestic partners. Finally, a major key to PwC’s diversity management is its mentoring program, which has been described as “world class.“ A mentor is a senior employee who sponsors and supports a less-experienced employee, called a protégé. Although half of the company’s mentoring pairings are cross-cultural, Moritz has asked each of PwC’s 2,500 partners to “consciously diversify their pool of protégés.“ Part of the partners’ evaluations will be based on their advocacy and investment in these individuals. But PwC doesn’t just expect its employees to know what to do in mentoring. A toolkit for successful advocacy was created that includes guidelines, suggested readings, and other internal resources. And the most important part of that toolkit? Videos showing real-life examples of partners and staff members sharing their personal experiences with mentoring.
What’s your reaction to these events? Are you surprised that bribery is illegal? Why do you think bribery takes place? Why do you think it needs to be outlawed?
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