Compliance &Ethics - Society of Corporate Compliance and Ethics

ule would not notably alter significantly whathad always been part of the directors’ obligations.The stipulation decreed:The Board will establish a Compliance andEthics Committee of four Directors, two ofwhich will be non-management directors,to meet at least four times a year to effectuatethese [compliance] policies and monitorbusiness segment compliance with theARPL [the Anti-Referrals Payment Lawwhich prohibits kickbacks], and report tothe Board semi-annually concerning complianceby each business segment. 19The most prominent attention in theUnited States to corporate guidelines has beenin regard to workplace sexual harassment. TheU.S. Supreme Court offered a standard for considerationof such guidelines by the judiciary:While proof that an employee has promulgatedan anti-harassment policy withcompliant procedure is not necessary inevery instance as a matter of law, the needfor stated policy suitable to the employmentcircumstances may appropriately beaddressed in any case when litigating thefirst element of the defense.” 20Kimberly Ellerth, a salesperson in the company’sChicago office, had sued BurlingtonIndustries for alleged sexual overtures by hersupervisor and his implied threats of retaliationfor her failure to “loosen up.” She hadnot reported her concerns to officials of thecompany. The Supreme Court indicated thatthe core issue was vicarious liability and thatBurlington in its defense could claim thatit had made suitable efforts to inhibit suchkinds of behavior by its employees. The Courtindicted two possible elements of such adefense: (1) That it exercised reasonable careto prevent and correct promptly any sexuallyharassing behaviors; and (2) that the employeeunreasonably failed either to take advantageof any preventative or corrective opportunitiesprovided or otherwise avoided them. 21Tyson Corporation: A case studyIn December 1997, Tyson Foods, Inc. pledguilty to felony charges based on its illegallygiving the United States Secretary ofAgriculture approximately $12,000 in giftsand favors, including football tickets, travelsubsidies, and food. As part of its settlementagreement the company, which at the timehad 66,000 employees in 27 American statesand a number of foreign countries, agreed topay a multimillion dollar fine and be placedon a four-year term of probation. The settlementalso mandated the creation of an EthicsCode Office and the creation of a corporatecode of conduct. In addition, two personswere prosecuted by the Independent Counselappointed to handle the case. A Tyson lobbyistwas acquitted of the bribery charge,but convicted for making false statements tofederal agents and received a small fine. Thecompany’s media director was found guilty ofbribery and sentenced to the minimum termallowable under the FSGO, a year and a dayof prison time. The agricultural secretary wasnever tried. The Tyson story provides insightsinto how governance codes can be mandatedand their operation can be closely monitored.And it also tells a tale of the kinds of indulgencespersons performing in the politicalarena can achieve.The settlement arrangement requiredthat Tyson report quarterly on its ethics programto a federal judge, a probation officer,the United States Department of Agriculture(USDA), and the Office of the IndependentCounsel (OIC, which was abolished in 1999and reformed as a branch of the federalDepartment of Justice). During the probationaryperiod, there were more than 70 surpriseCompliance & Ethics Professional May/June 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 59