Have zero tolerance of corruption: Risk Management Summit speakers

NEW YORK — Companies should have a zero-tolerance policy for corruption in emerging markets, a speaker said at the Business Insurance Risk Management Summit.

Richard J. Coyle, executive director of the Emerging Markets Institute at the Samuel Curtis Johnson Graduate School of Management at Cornell University, said Tuesday that the Foreign Corrupt Practices Act not only forbids companies from engaging in corruption, it also requires them to report it.

Speaking during a panel on emerging markets, the former senior director for international corporate affairs at Wal-Mart Stores Inc. said Wal-Mart has an absolute no-tolerance policy concerning “even the smallest requests” for bribes.

While the FCPA does allow “facilitating payments,” such payments are “more like tips” and are “not the same as envelopes loaded with cash,” said Ithaca, N.Y.-based Mr.Coyle.

There is a “clear distinction” and “you have to adopt a no-tolerance policy. That gets very difficult in foreign countries in terms of getting the message through to employees,” he said, noting this can be part of the country's culture. “You may indeed find things are going on that you would never condone,” said Mr. Coyle.

“Be ready for when it presents itself to you and think about it in advance, how you're going to deal with it, because if you're caught by surprise, you won't be prepared,” Mr. Coyle said.

“Many of the scandals I've encountered, a lot of them didn't start out to be a problem,” he said. “It's a series of many decisions that gets you down to that situation.” Companies “must refuse it at the very beginning.”

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Ignorance about what is happening down the supply chain is not a defense, he said.

Daniel Wagner, managing director of Norwalk, Conn.-based Country Risk Solutions, criticized the U.S. anti-corruption law.

“I just don't see how companies can function, basically trying to do things the FCPA way in a place like the Philippines,” he said. “It can be done and it is done, but it seems to me the rules of the game are simply very different in many countries.”

Mr. Wagner suggested the U.S. reconsider “how we operate FCPA and what impact it has on business.”

Other panel speakers included J.P. Fowler, Chicago-based executive vice president and head of customer relationship management for Zurich Global Corporate in North America, and Christopher E. Mandel, senior vice president of strategic solutions for Memphis, Tenn.-based Sedgwick Claims Management Services Inc.

The session was moderated by Business Insurance Managing Editor Paul Bomberger.