
According to the Oxford English Dictionary a “Caper” is either a pickled sour bud or a dangerous activity.
Corporate Compliance must be one of the few topics that fits BOTH definitions.
Never has the corporate world been so much audited by the internal Compliance Department. Mention Compliance Rules to any corporate manager and they start to itch and sweat. Mention that they are going to be audited by internal Compliance Department and they will have heart palpitations. The honest managers that is. The dishonest ones will sleep easily. Because they know what boxes need to be ticked.
You would think that after the Sarbanes-Oxley Act was passed in 2002, bringing personal liability to boards of directors for the misdemeanours of companies, that there would be no more financial scandals like Enron or WorldCom. Yet here we are in 2023 with countless frequent examples of huge financial scandals, corporate theft, fraud and wrongdoing. In 2021 alone, after almost 20 years of SOX, we had ABN Amro slapped with a €480 million fine for money laundering. NatWest Bank received a fine of £264 million again for money laundering. In this example the case resolved around a specific customer - Fowler Oldfield - who deposited £365 million with NatWest of which £264 million was in cash. Staff reported their suspicions to senior management who, of course, took no further action. And of course, 2021 couldn't be escaped by Deutsche bank - always a reliable source of some dreadful jucy scandal. It was fined $120 million for engaging foreign officials, their relatives and their associates as third-party intermediaries, business development consultants and finders to obtain and retain global business. The SEC stated that approximately $7m was paid by Deutsche Bank in bribe payments or payments for unknown, unauthorised or undocumented services. You couldn't make it up. *See at the very end of this blog release for latest newsflash
I could go on. The list is seemingly endless.
So what in the name of good ethical and legal practice has gone wrong?
Certainly I did my own double take some years ago. One of my businesses received notice of an internal audit by the Compliance Department - apparently a routine occurrence albeit in the case of this particular business - an occurrence that seemed to come up with remarkably greater frequency than any other country in the global concern. Perhaps it was the delicious food the country was renowned for. Or the delightful scenery. We seemed to be audited every other week. Or so it felt anyway. But that's just being cynical and as you know I am never ever cynical. Nevertheless - as the Compliance Team like to say, they are from Head Office and they are here to help. Here to make sure we are doing things both correctly and efficiently not just legally, morally and up to ‘compliance standards’. Why object to that?
Well it all started innocently enough. The local lead of the compliance team - a young up and coming chap possessing I was told a “high intelligence”. Personally I found him a bit arrogant and just a tad too headstrong - you know what I mean - revelling in upsetting ordinary members of staff. These days we call it bullying. But so be it. Arrogance at least still seems to be part of the job description for compliance these days.
Apart from the occasional employee running away in tears - a frequent occurrence during these 'helpful' HQ visits - everything was trundling along with usual pace and expectation. That is until one morning. The individual arrived from his hotel. Deposited his team in the data room. And immediately sought a meeting with my local CEO. Turns out this young buck needed our help. A very specific type of medical help as it happens. Urgently. To help with a problem “down there”. My genuinely helpful colleague, ever the gentleman, naturally made a few phone calls and then discretely passed him a piece of paper with a suitable doctor's contact details. Transport was kindly arranged. Within 24 hours the problem was solved, much to the relief of the head of this internal audit. Seems he was quite busy in the evenings.

The thing about this and the problem for me was the implication this had - or might have had. I just couldn’t judge if the subsequent swift resolution of the internal audit with an 'exemplary’ rating was - well - accurate or not. I hoped so, and believed so, knowing my team, that it most probably was. But hoping so is not quite the same as seeing it proven beyond reasonable doubt. Could I fully have confidence in the internal audit? Or not?
Now I will be the first to argue that what an individual does in his or her private time is a matter for them - not the corporation. However, this wasn’t entirely that clear cut. He was in our country staying at an upmarket business hotel at company expense. And since he explicitly sought help from one of my most senior team members it wasn’t exactly without potential implication or conflict of interest. And I am not talking about the difficult area of corporate image and an employees responsibility towards upholding it. Also by the way a subject ‘regulated’ by our Compliance rules.
But this wasn’t the end of it. At least for me. What to do in this situation? My colleague had told me in confidence about this development. I wrestled with the conflict - private activity - whether I personally approve of the morals of it was really irrelevant. What was not irrelevant was not just a potential conflict of interest but the obvious potential for bringing our company into disrepute should any of this get into the public domain. In an age of social media that wasn't so unlikely.
What to do? I decided to pick up the phone - to my opposite number in the parent company Compliance Department - in effect his boss. Better to make a phone call, explain the situation and discretely request that he gives some personal guidance to the enthusiastic purveyor of night time activities. Away on business implies certain rules. Compromising those raises doubts about the work completed. It's a simple message I think.
The conversation turned out to be far more difficult than I imagined. I didn't want a formal disciplinary communication. I wanted some guidance for the employee. Give him another chance and to learn from his mistake. The discussion was curt. Even antagonistic. “Why are you telling me this?” ”What are you trying to say?” ”Why are you criticising my Department.” “Do you perhaps have something to hide?” Talk about a 180 degree turnaround. I felt I had offered an olive branch and received in return the nozzle of a Colt 45 up my nose. What happened next was truly startling.
It was 2 or 3 weeks later that I received a call from a relatively junior accountant in my “home” country. The Group Compliance Department had started an investigation. “Into your expenses Andy”. “Pardon?” I replied. “Yes, they have asked for detailed submissions of your last 5 years expense claims”. “Er…ok…fine” I replied. “Thanks for letting me know. Of course you should give them all the information they ask for” I replied.
As it turned out after about 4 weeks of investigation, apparently by three people specially flown in, nothing was found. Not really surprising when you read some of my previous blogs on sales. I have no idea if the two things - my contacting Compliance and the rapid investigation of my expenses were linked. I have no evidence either way. I will leave that to the reader to decide. Coincidence it was - quite remarkable too.
And therein lies one of the big problems with Compliance departments in major corporations.
Quis custodiet ipsos custodes?

Who audits the Compliance Department....for Compliance and Ethical behaviour? And, who, in turn, audits the auditors of the auditors? It's an age old problem not just for Roman Emperors. Particularly when those departmental leaders obtain and depend on their position and favour on the directors of the top level business. Are those directors liable to the same rules? Um...well...
Some years ago I had a regular review dinner with one of my sister company colleagues - the country CEO in one of my country jurisdictions. A kind of local ambassador for all the global subsidiaries in the country. He was a damned fine chap if I say so myself. Of German origin he had been in the service of the company for his whole working life, had spent most of it living and working around the globe outside of Germany. He had a long and varied career history, a sharp mind, and an even sharper wit. I liked him. He also had a certain disdain, built over a lifetime of experience, of the global board directors. Not all. Most. I liked him even more. I shall call him Kurt.
As I sat down with him for a very enjoyable - as always - dinner he told me about his current activities. “Oh my god…Andy..you can’t believe how much time I am having to take regarding the forthcoming visit of the [global conglomerate] board of directors!” I quickly replied “But surely you have people who can take care of that for you…I mean…it’s just hotels and logistics….isn’t it?” “Oh my God, Andy. Don't be so naive” he replied. “Mr X [name withheld] won't travel from the airport with Mr Y, Mr A won't share a hotel with Mr B. Mr F wants to know the square metre size of his room to ensure it is bigger than that of Mr J”. After 5 iterations of this discussion I lost the thread to be honest. But I was both shocked and fascinated `at the same time. A bit like watching an episode of 'Love is Blind'.

“My goodness” I said, “I had no idea. That’s crazy”. “It gets worse” Kurt replied. My business unit has to pay their local expenses. After the last experience I had to inform every one of them the ground rules“. My ears pricked up even more. “What do you mean?” I said. Kurt replied “I had to tell them, quite formally, not to include expenses on their hotel bills for items such as drugs, condoms and prostitutes” “WHAT?” I replied, aghast. I didn't mean to sound like a famous retired American tennis player turned tennis pundit but I think I really did sound like him....“You CAN NOT be serious!” “I’m absolutely 100% serious” Kurt replied. “And it appears more than one doesn't bother with condoms!” I have no idea to this day if that last comment was meant in jest or not. But I can assure you that everything else was said with seriousness and with genuine distraught disgust. Frankly, like most people would be, I was disgusted too. And I was right to be.
Recently in the UK we have had the premier corporate lobbying organisation - the UK based Confederation of British Industry - facing a compliance issue all of its own. And fascinating reading it makes too. Its CEO, Tony Danker, was fired. Sex, drugs and rock and roll would be mild according the press reports of the things that went on. Sexual misconduct occurred frequently if reports are to believed. Worse still, even rape. To be fair to Mr Danker he was quick to point out that such things occurred before his tenure and that he wasn't aware of them. Unfortunately, when you are the leader of a business, it's never really a great defence to claim you have no idea what is going on in it. Especially it seems when one of the complaints of inappropriate behaviour is directly levelled at you. We will have to wait and see how the facts unfold. Mr Danker was quick to publish a list of the items for which he was, allegedly sacked;
For organising a secret and private karaoke party for 15 people, for viewing the Instagram accounts of CBI staff, for sending non-work related messages to staff and for inviting junior staff to breakfasts, lunches or one-to-one meetings.
While Mr Danker acknowledged he had made some staff feel 'very uncomfortable' and he apologised for that, he insisted he had 'never used sexually suggestive language with people' at the company.
Now on the face of it, taking the above list at face value, none of the items strike me as justifying contract termination even if one or other seem a bit odd. But here is where the 'Fog of War' starts to creep in. Dinners with young members of the corporation are actually perfectly ok in my opinion, indeed I would argue a very positive use of a leaders time. So long as one essential element is adhered to - a dinner with a sizeable number of colleagues - ie more than one! Not some romantic one to one dinner by candle light. This is supposed to be Leadership, not Tinder. Note I am not suggesting for one moment that Mr Danker did the latter. I have no information on that. My point is the wider point. That getting a group of colleagues for a motivational breakfast, lunch or dinner is a wonderful thing to do. Taking an individual out to a romantic restaurant one evening would be beyond rash. The former is motivational, educational and benefits everyone, including the senior who might learn something about the hopes and aspirations of up and coming employees and perhaps also a little of the real world. The latter is an absurd, naive and frankly daft action. Unfortunately I have seen the latter so many times. Not least with my bosses. Romance is a fine thing it seems…in the case of senior management, even better when it is paid for by the shareholder apparently. It's not good enough. And I'm not talking about the quality of the wine list.
But it gets worse. Also mentioned in the CBI reporting was that Mr Danker made some employees “feel uncomfortable” to which he has publicly apologised. Now I have now idea in his case what that meant in practice. What I can say is that I myself have felt more than uncomfortable on many an occasion with my seniors' actions. A couple of examples just to wet your appetite.
I was once on a plane together with my the boss of my boss on the way to a business review of my part of his global empire - yeah, a very senior person, especially considering I wasn’t exactly the office junior myself. After demonstrating a total and embarrassing lack of knowledge of my business' performance he quickly and skillfully changed the subject. Or it would have been skillful had the new subject matter been in the slightest bit appropriate. It wasn’t. He started telling me about what he would like to do with the Stewardess serving us on the plane. I honestly cannot quote him - it’s inappropriate even for this blog let alone discussing this with your employee. Suffice it to say he went on to describe in excruciating detail the sexual wonders of the female foot and calf and what he would like to do with the same if “offered” to him. Offer isn’t really the word he used. But you get the drift. It's hard to respond adequately in this situation - not least because it rather takes you aback. What do you do? Do you start talking about other parts of the female anatomy on the lines of an ex US President captured for posterity on audio tape? Or do you tell him that “I'm really rather tired and would you mind if I take a quick power nap.“ I chose the latter route, much to my randy senior's chagrin. Another black mark on my career. I'm anti social don't you you know.

It was the same person who once, visiting my leadership team and I in the most successful business in the group, he openly and oddly proclaimed to all of us how fascinating it was to observe in the bar the previous night, “ Eastern European hookers chasing middle aged businessmen around all evening.“ “Er..... OooKaaay” was my silent shocked thought…but I had no time to come up with any appropriate words. He continued, “Andy, where can I find a cash machine?” I told him. He went. He came back. Opened up his wallet in front of us all, bristled the wad of notes like a fresh pack of cards, and proclaimed “that should do the trick”. Once again I was at a loss for words. My team could barely hide their sniggers, shock, and disbelief.
On reflection I was quick to realise that this morally bankrupt senior leader was an imposter. He was totally unsuitable for the role. Like King Charles II {note II NOT III !} , he always gave the impression that running the organisation was an unwanted distraction that got in the way of chasing women. He’d much rather have devoted all his time and energy to satisfying his sexual appetite - and frequently would ask me to find him a nightclub for that very purpose. I never did. Discretion wasn't an issue for him. He was shameless, openly flaunting his affairs and passions and fetishes. He had no particular talent worthy of any leader and only demonstrated the utter absurdity for the way leaders are appointed. But leadership appointments and how to avoid making a mess of it is another blog for another day. Suffice it to say that this person reminded everyone of a dim womanising commodity trader straight out of the 1980's. Which was hardly surprising. Because that is exactly what he was. A bartender in a seedy nightclub would have been a role more suited to his talents; were it not for the fact that he was also an alcoholic. I'll leave for another blog the story of how I once had to carry him to his room after he got totally drunk. A sadly all too common occurrence. The truth is he needed mental help not employment. As far as 'Leaders' go he was one of the better ones.
Now I am not suggesting for one moment that all people in leadership roles are like this example. I have met many who are excellent dedicated individuals....and I like to think I have helped a few along the way in my own career. But the fact remains that too many totally unsuitable people are in senior leadership roles. Chosen not on the basis of talent but on the basis of being willing to overlook the peccadillos or more serious misdemeanours of their own boss....themselves in that position for exactly the same reason. It's a bit like a Tinder version of the secretive Freemasons. You know, the ones with a funny handshake and that look in their eye. And I met a few of those in leadership positions too and yes, before you ask, they were equally unsuitable. This has to stop.
The simple truth is that senior management fails frequently. And it often fails big. Especially in the ethics stakes. Sometimes it is because they have simply not kept pace with the world. Acceptance of ’a bit on the side’ a’ la Nelson’s Lady Hamilton is not acceptable today in any organisation - especially when that 'bit on the side' is an employee within the same company. Neither are comedy programmes that were funny in the 1970s or even 1980s. Clue: it's why they are now longer shown on regular TV. But sometimes the basis for leadership indiscretions are even more simple to understand. As one of my mentors - the CEO of a bank leasing company - told me early in my management career, “Andy, I have met too many leaders who ruined a fine career because they just couldn't keep things inside their underpants”. It's great advice. As is my oft quoted statement to my own team members “I don't care what you do in your private life….just don't do it with someone in the company.“
On the face of it I have drifted a long way from the topic of corporate compliance. In fact it is highly relevant. My purpose is to point out that prescriptive rules of behaviour are not only inadequate to stop inappropriate behaviour, it is actually unhelpful because it encourages the assumption that rules are enough. Obey the “rules” and you are fine. That is the fatal assumption that too many businesses still make. It suits the crooked and unethical very very well. Just tick the boxes and all is well. Except of course as we all know it isn't.

There would be few people who would argue, at least in public, about the good intentions of the senators driving the SOX legislation. To understand why, in practice, it doesn't seem to have stopped wrongdoing, you need to understand corporate culture and where it originates from.
According to Paolo Gallo, Chief Human Resources Officer of the World Economic Forum, “traditional management thinking is based around three fundamental assumptions.
First, that organizations need a top-down approach to strategy and objective setting; second, that the role of management and human resources is to measure/control what is being done to achieve objectives and to provide the corresponding incentives for performance or non-performance; and third, that monetary incentives motivate people.
Accepting these assumptions, grounded in [an outdated] [my insertion] dogmatic approach, means that CEOs and executives decide on behalf of people, managers control and HR professionals develop complex systems to measure performance, incentives and. consequences. Sounds like the same old story of carrot and stick”
It also sounds like the military dogma of old. Which isn't surprising. Because that's exactly where the management models we know and despise originate from. The irony is that in most Western European countries and the USA the military have moved on. Today the emphasis and training of our military is all about “participative leadership” involving upward as well as downward information exchanges, “open communications”, and willingness to encourage ideas. Above all there is a recognition that training itself can I only go so far.
"Soldiers learn to be good leaders from good leaders."
—Retired USA ninth Sgt. Maj. of the Army Richard A. Kidd
Well now. Who would have thought it.
I had the privilege to be brought up by my mother - in a single parent household. She gave me everything she could and moulded me into the person I am today. She was my role model, my leadership guru, and my hero. She instilled a sense of moral duty, hard work and sense of service that I have valued and used daily as part of my moral compass. She never wrote down a single “rule”. I learnt right and wrong not from 40 volumes of conflicting prescriptive “compliance rules” but from her own example. I suspect and hope that in one shape or another this experience was not so dissimilar for you with your parents.
Once, when I was about 10 years old we shared a Christmas dinner with one of her employees - an older Polish gentleman who had escaped Poland during communist times to settle in the UK leaving his relatives behind. A few days before, she had asked him what he was doing for Christmas. “Nothing” he replied. “It is a difficult time for me - I have no relatives in England and what should be a celebration with family will be a sad occasion for me”. She simply scooped him up, told him that this year would be different. He would join her, me, my uncle and my grandmother for a family Christmas. Just to reiterate. He wasn’t a family friend. He wasn’t a relative. He was an employee in the business my mother led. It's called moral Leadership. It's from the heart. Its real. And this was the example of behaviour shown to me. I thought it was normal.
An therein lies the secret of successful leadership that complies with legal, moral and ethical standards of behaviour. It's not enough to rely on words buried in word documents. It's about the leadership example set by the people at the top. I tried as much as possible to avoid reading Compliance rules - no human could possibly do it - there were volumes and volumes of the stuff - often conflicting. And yet I can confirm with total sincerity, I never broke a Compliance rule. Why? Because I knew inherently what was right and what was wrong. My mother taught me that. If any person in any leadership position doesn't understand this point then they shouldn't be in a leadership position. Including the Head of the Corporate Compliance Department.
In Germany there is a saying that ‘the fish rots from the head down’. It always has. It always will. It's worth thinking about that when the next ‘compliance failure’ hits the headlines. So simple to fix. It's the head of the fish that makes the difference.
© 2023 Andreas Swadlo

Would you like some help with issues of corporate ethics? Do you need a leadership coach? Or some help with your business? If the answer is yes then get in touch. I can give you some ideas for for how to energise your business and create an entrepreneurial team that doesn't stop at just ticking boxes.
Whether you want to totally transform your business, start a new one or simply refine a winning team then let me know. I truly believe that leadership matters....and that great leadership can make a great difference.
*Newsflash: talking of Deutsche Bank, this today: https://www.bbc.co.uk/news/business-65630338
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