Building a World-Class Compliance Program: Best Practices and Strategies for Success

Chapter 1. Why Ethics and Compliance Will Always Matter

"There is no such thing as business ethics. There is only one kind—you have to adhere to the highest standards."

—Marvin Bower, former managing partner of McKinsey & Company

I magine this nightmare scenario: A publicly traded company whose domineering leadership rules by fear. Dissenting opinion in any form is met with immediate termination of employment. A culture where written policies and procedures are few and far between and internal controls are shunned. Training is sporadic and lacking. Eventually, this company's senior-most executives conspire to prematurely and fraudulently recognize revenue to meet or exceed Wall Street's expectations. They conduct this massive fraud year after year. The board is totally in the dark and accepts management's explanations and assurances without independent verification. When their accounting practices finally are scrutinized and the government starts an inquiry, these executives attempt a cover-up by fabricating a story, obstructing the investigation, and suborning perjury by instructing other employees to lie to the government and outside counsel. Ultimately, eight of the company's senior executives including the CEO, CFO, and General Counsel, plead guilty to securities fraud and/or obstruction of justice charges. Shareholders lose over $10 billion due to the massive accounting fraud. Employees are left shocked and demoralized that their leaders have lied and defrauded their company. ...