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Why Do Anti-Corruption Programs Fail? Look In The Mirror Mr. Bistrong


People like a good comeback story.

Thus, when Richard Bistrong emerged from federal prison for pleading guilty to Foreign Corrupt Practices Act violations in late 2013, many people become interested in his story. After all, Mr. Bistrong was not just an FCPA violator, but also involved in other conduct. (See here for a Washington Post story providing specifics).

I was one of them who became interested in Mr. Bistrong’s story when I published this detailed Q&A with Mr. Bistrong on FCPA Professor in April 2014 (a Q&A that was subject to various limitations presumably because Bistrong remains on supervised release until January 2017. ).

Since the April 2014 Q&A, I have continued to follow certain of Mr. Bistrong’s writings and other public appearances. There is Richard Bistrong the video, Richard Bistrong the cartoon, Richard Bistrong the talk show, Richard Bistrong talking about FIFA, Richard Bistrong talking about Unaoil, Richard Bistrong talking about the Panama Papers, and according to Ethisphere, Richard Bistrong one of the “100 most influential people in business ethics.”

It appears that two common themes Mr. Bistrong frequently advances in explaining the apparent root causes of bribery are incentive compensation and “stretch goals.”

For instance, Mr. Bistrong has suggested that incentive-based compensation for international sales, marketing, and business development teams “create[] incentives that foster corruption.”

As I previously highlighted here in June 2015, I find Mr. Bistrong’s suggestions that incentive-based compensation is to blame, at least in part, for FCPA violations to be a scapegoat. Such a suggestion fails to recognize that millions of individuals work subject to incentive-based compensation structures, yet will not be ethically compromised to violate their employers compliance policies or engage in criminal activity. That a few will, does not mean that the incentive-based compensation in which they work is to blame.

Regarding “stretch goals,” Mr. Bistrong states:

“Stretch goals are quite common in forecasting and quotas. When a sales person achieves a goal, a manager might think it was too easy and had too much cushion. So the manager ups the ante for the next quarter or reporting period.”

According to Bistrong: “When a company follows a big international sale in a low-integrity region with a new stretch goal tied to lucrative variable compensation, it sends a message to the field, “win again, above all else.”

Here again, I find Mr. Bistrong’s suggestion that “stretch goals” are to blame, at least in part, for FCPA violations to be a scapegoat. Again, such a suggestion fails to recognize that countless individuals are subject to “stretch goals” or similar programs, yet will not be ethically compromised to violate their employers compliance policies or engage in criminal activity. That a few will, does not mean that “stretch goals” are to blame.

This recent post on Mr. Bistrong’s website asks:  “why anti-corruption programs fail.”

Here is one answer to Mr. Bistrong’s question: look in the mirror.

As Mr. Bistrong himself explained in “How to Pay A Bribe.”

  • He took his international sales job “with no international sales experience” and “was eager to put numbers on the board.”
  • He had “something to prove and here was [his] chance”
  • He knew what he was doing “wasn’t right, but [he] minimized and rationalized [his] role”
  • He “could have disclosed what was going on [to his supervisor] and we could have unwound those transactions right then and there.” However, he knew “that if I called my boss and shared with him that I was facing a decision as to whether  or not I should break the law, the answer would have been crystal clear: ‘don’t do it under any circumstances.'”
  • He became friendly with the third-party agents who facilitated his bribery scheme, vacationing with them and “became an increasingly active participant in [his] agents’ bribery schemes.”
  • He states he became “so ethically numb” and his “toe was already well deep in the waters of criminal and corrupt conduct.”
  • He states “many of my irrational calculations of risk, consequences and conduct were even more distorted through the awful lens of addiction” and in his words his addiction led to “an increased sense of isolation and narcissistic behavior.”
  • In conclusion, he stated: “When I am asked, ‘what could have stopped you? My response is quite simple: nothing.”

That, and that alone from my perspective, is the lesson of Mr. Bistrong for the FCPA and broader compliance communities.

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