Compliance &Ethics - Society of Corporate Compliance and Ethics

It is the policy of the company to complystrictly in all respects with the antitrustlaws. There shall be no exception to thispolicy, nor shall it be compromised orqualified by an employee acting for oron behalf of the company. No employeeshall enter into any understanding, agreement,plan or scheme, express or implied,formal or informal, with any competitor,in regard to prices, terms or conditions ofsale, production, distribution, territories, orcustomers; nor exchange or discuss with acompetitor prices, terms, or conditions ofsale, or any other competitive information;nor engage in any other conduct that in theopinion of the company’s counsel violatesany of the antitrust laws. 11charged companies, without internal directives,retained the malefactors.Bribery to secure foreign contractsTwo developments prompted further activityin the development of internal codes of conductin American companies. The first was theWatergate break-in by thugs working on behalfof the re-election of President Richard M.Nixon. The investigation of the botched burglaryuncovered numerous illegal donationsof corporate moneys to the president’s electioncampaigns. These contributions tended to bedisguised by accounting tactics that brokethem into small amounts unlikely to be discoveredby external auditors who rarely did morethan a cursory sampling of such transactions.Compliance & Ethics Professional May/June 2012Each manager periodically was asked toindicate in writing that he/she was adheringto this policy, specifying that: “I am observingit and will observe it in the future.” But,most employees presumed that the directivewas window-dressing, meant to lull thepublic and the regulatory authorities. OneGE employee, however, refused to engage inprice-fixing after he initialed the document.A witness before a U.S. Senate committeeinvestigating the price-fixing crimesexplained what happened:[My superior] told me, “This fellow is afine fellow, he is capable in every respectexcept he was not broad enough for his job,that he was so religious that he thought, inspite of what his superiors said, he thoughtthat having signed that, that he shouldnot do any of this and he is getting us introuble with competition. 10The consequences for the convicted violators,in part, reflected the existence of the codeat General Electric. The company fired allthose implicated in the conspiracy. The otherIt is telling that, despite theseguidelines, prosecutions forinsider trading often rely noton the core law but on auxiliaryviolations such as perjury.The second situation was the discoverythat American companies were paying hugebribes to overseas corporations, politicians,and political parties to obtain contracts. Anamnesty approach saw more than 400 companies,including 117 of those on the Fortune 500List, admit to having paid out more than $300million to foreign sources. In 1977, Congressenacted the Foreign Corrupt Practices Actthat criminalized such actions. Corporationsresponded to both of these scandals by creatinginternal governance rules that prohibitedoverseas bribery. 12 Specifically, offendingcompanies had to assure the Securities andExchange Commission that they had takensteps to see that such activities did not recur.In addition, in 1988, the Insider Tradingand Securities Fraud Enforcement Act56 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977