Joost Wiebenga is Deputy General Counsel & Chief Compliance Counsel EMEA for Tyco International and has operated as an in-house counsel since 1975. As a member of Tyco’s legal division, Joost and his colleagues focus on balancing legal coverage & compliance, client satisfaction, internal headcount and cost (i.e. outside counsel and related legal spend) in an optimum manner. Tyco International Ltd. is #192 on the 2008 Fortune Global 500 ranking of world’s largest corporations.
Tyco‘s business encompasses fire & security systems, valves, controls and safety products. As a result of a difficult period at the start of the millennium, Tyco is now committed to ethical business and setting a shining example to other multi-nationals to conduct business in an ethical manner through it’s dedication to ‘tone at the top and the middle’, strategic direction from the board and a set of policies and procedures designed to promote the highest standards of honesty, integrity and ethics.
Joost Wiebenga - a speaker at the Corporate Compliance Exchange May 2010, Brussels – has been instrumental in reinforcing these values at Tyco, a strategy designed to effectively manage reputational risk throughout the supply chain and prevent corrupt behaviour from 3rd parties operating on behalf of the company. Not only is it his career, but Joost has strong passion for the subject, having completed in 2009 a Masters Degree in Corporate Compliance at the Vrije Universiteit Amsterdam, with his thesis on the subject of risk mitigation strategies against bribery.
Who better then to share with Legal IQ their strategy for anti-corruption practices and perception of the challenges facing Chief Compliance Officers in the near future. It’s quite clear that ignoring the importance of ethical business is no longer an option. To the contrary, unconditional compliance can provide a sustainable competitive advantage.
The Challenge of Emerging Markets - Using Collective Action to Eliminate Corruption
Emerging markets, identified by Transparency International as perceived to be corrupt, present a huge challenge to multi-national companies and Joost exercises due-diligence on behalf of Tyco when dealing with such markets. However, he believes that the perception of the country is not enough to solely base a decision on and a number of other factors must also be considered. “I can’t emphasise enough that Transparency International does a good job, but it’s only a perception, there is no academic way of measuring [corruption]. Transparency International is of course one way to look into risk, but I also look at the judicial system in the country, perception of the government and if there is any case law on corruption”.
The other factor that Joost believes to be important besides the market itself is the type of relationship, for example, ensuring close scrutiny of intermediaries. Companies should also be alert when they are operating in markets where the customers/end-users are government owned or controlled, to ensure monies don’t end up (directly or indirectly) in the wrong hands. The new UK Bribery Act 2010, amongst other initiatives, will force companies and their executives to re-evaluate their approach to market, considering the quickly developing “reasonable expectation” and “corporate liability standards”. “Keeping an eye on intermediaries is no longer the prerogative of the United States under the FCPA, but European legislators and enforcement authorities are more and more looking into commercial bribery as well, something that I think the European Union is increasingly proactive in”.
Operating on behalf of Tyco, Joost’s team implements due-diligence, correct documentation and audit trails to minimise risk. In addition, Joost is a strong advocate of collective action. Collective action is a practice that organisations such as Transparency International, World Economic Forum’s Partnering against Corruption Initiative[1] and the UN are promoting. Collective action can help abolish unethical practises from 3rd parties and such initiatives are becoming more necessary and much more powerful.
Joost says of the strategy, “I can work with my compliance counsel counterparts in competitive organisations to collaborate in a way - that is not-anti competitive - but ensures a fair result for customers and ensures customers’ customers are not being disadvantaged by corrupt behaviours. What we can try to do is create a level playing field, a lot of corporations could be trapped – so either we say we don’t do any business here, or we say if we do, we work on the same ethical principles”.
The ABC Strategy for Corporate Compliance
Due-diligence throughout the supply chain sounds a daunting task. In addition to enforcing ethical business externally, Tyco promotes its ethical values internally; to ensure complete ‘tone’ inside and out. When asked what strategies Chief Compliance Officers can implement to ensure effective oversight and implementation, Joost reveals on a personal note his ABC of anti-corruption, which he developed and researched at University.
A = The Agency Principal Relationship refers to what was touched upon previously in this article, “Know your customer, know your suppliers, know your partners; by due diligence, by reputation, by checks – it is one of the most important things, it sounds obvious but it is important. This should go beyond the paper files and check-the-box exercises. In the end the only things that eventually count are the real facts and the real relationship, i.e. substance over form”.
B = Behaviour is the necessity to create a corporate culture of compliance, something Joost believes is a common threat for multi-national companies. Tyco has tone at the top, with a board that is absolutely committed to ethical business, but Joost argues that you also need tone in the middle and lower. “It’s not difficult to get the top convinced, now you have to convince the managers at the middle level who have done business for 30 years in the same way and think it was successful”. Tyco uses continuous and proactive training, including reflection workgroups where employees go through cases and talk openly about the issues and dilemma’s in different structures.
C = Controls (Internal) is the control environment – ensuring the company has the appropriate checks, balances, documentation and lines of defence in place. Joost also differentiates between soft and hard controls, the (hard) controls being the ‘C’ and soft controls representing the ‘B’ (behaviour aspects). Joost believes that soft controls are still vastly underrated, “A lot of companies still put a lot of emphasis on results, bonuses and financial targets. However, more companies are now making sure the correct ethical environment is also a standard, and appreciated as part of your incentives. I think that is more and more becoming an important issue for multi-national companies. It’s also a matter of accountability, not only for those in the field but also up to an executive level. It’s not only in word but also in mind and in heart”.
Compliance as a Competitive Strategy
Prevention is better than cure. Most companies with stringent compliance polices are those that have been fined and penalised, and Tyco is no exception. Multi-national corporations in particular should be proactive on the issue of compliance or accept that they will slip up sooner or later. Companies that realise this are therefore adopting ethical procedures and fighting against corruption.
The first motivation to do so is to protect the company. Engaging in unethical procedures can lead to criminal behaviour, and ultimately result in fines, imprisonment, disgorgement of profits, loss of business and will seriously affect a corporations reputation, credibility and market value.
The second motivation is to remain best in class as a corporate citizen. Joost comments on the recent recession, which has put more emphasis on the importance of the stakeholder. “There’s a changing environment where people look at what the company is doing for the shareholders, the community and the employees. Employees are also more inspired to go to a company with a high reputation”. Furthermore, at a time when compliance procedures are still slow on the uptake, pioneering a compliant culture will give you a competitive advantage in the market place and position you as a leader in the area.
The third and final motivation is of course from a personal desire to operate in a way that does not harm or disadvantage others. As his Ethics Professional once mentioned , “While we take high values and norms for granted at home, at school and in our community why would we use different values and standards when doing business, particularly in poor emerging markets with highly underpaid civil servants prone to corruption?”
Joost concludes our conversation with a clear no-brainer as to why companies need to start putting in place procedures against bribery, anti-corruption and other unethical practises. “In the end, it’s the debate between the short term and the long term. If you only think in quarters then you may be tempted not to think it’s important, but if you remember that a corporation is also based on continuity and shareholder value, there’s no choice than just to do it”.
Interview by Lindsay Lovell
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