Given my practice area, people often ask me why people commit white-collar crimes. I ask myself this question; and, just as often, I ask myself how can I help my corporate clients mitigate the risks of committing a crime? Despite my lifelong quest to answer both these questions, I have no good answers.
Unfortunately, the U.S. Navy must ask itself these same questions.
The Navy is dealing with a massive bribery scandal that involved countless officers and went on for years. Navy officers succumbed to the offerings of “Fat Leonard”, a non-U.S. citizen owner of a U.S. defense contractor who, in exchange for Navy contracts and information on the movement of U.S. ships (that is classified information), provided Navy officers –you name it – watches, vacations, wine, whiskey, duck confit, prostitutes, hotel rooms, vacations for their families, and purses for their wives.
As the U.S. Attorney for the Southern District of California, who is handling many of the cases, put it when discussing a Navy officer who recently pled guilty: “[The Navy officer] deliberately, methodically, and repeatedly traded his public office for entertainment expenses and the services of prostitutes, and in so doing, aligned himself with a foreign defense contractor over his Navy, his colleagues and his country.”
So, the question is: why would a significant number of Navy officers, over the course of years, “align themselves with a foreign defense contractor rather than with “the Navy, their colleagues and their country” in exchange for parties and prostitutes?
That question may never be answered and quite frankly, when those Navy officers get arrested and face a judge, they will likely ask themselves that question, without a good answer. It is hard to believe that a person, who dedicates a career to serve this country, is willing to give away state secrets for booze, sex, and food. But, as hard as it is to believe, it’s a tale as old as humankind.
Let’s put that question aside because there is another question the Navy needs to ask itself: Why didn’t its policies, procedures, culture, whatever you want to call it, prevent or catch the behavior? It appears that whatever was going on, it actually enabled the behavior to go undetected for years involving dozens of Navy officers.
One event, in particular, demonstrates that something was not working for the Navy. According to the Washington Post, in February 2006, as a Navy ship prepared to dock in Hong Kong, a military lawyer sent a message to senior officers on the ship reminding them to take care to avoid bribes from defense contractors while in port. Instead of heeding the message, one of the senior officers forwarded the message to Fat Leonard, the bribing defense contractor himself. According to reports, Fat Leonard is alleged to have gone on bribing the officer who forwarded the message and others for years.
The Navy regularly trains its people about gifts, meals, entertainment, bribery, and ethics. In fact, to facilitate learning, the Department of Defense, Office of General Counsel, at times publishes an Encyclopedia of Ethical Failures (always an interesting read). So that message was not the first time the Navy officers on that ship, or any ship, were told that they cannot accept gifts over $20; that they cannot accept bribes of any amount; and that they cannot give away classified information; etc.
Yet it happened.
What is the Navy or any organization to do to prevent criminal and unethical behavior?
Realizing that part of this question is the first question I asked – why do humans do what they do? – and best left to psychologists, philosophers, and artists who contemplate our human existence, lets focus on what an organization can actually do to avoid this type of mess.
Without going all legal – and citing to the laws and regulations that require an organization to have an “ethics and compliance” program to mitigate this type of risk; without talking about the compliance buzz words of “culture”, “tone at the top”, “leading by example”, “training” etc., what can a business do?
At the most basic, the Navy or any organization, needs to:
1. Create a workplace where it is easy to follow the rules by:
- Creating defined rules. “Do not accept gifts valued at over $20 – ever”
- Instructing on the rules. Teach through training and through emails but also teach in business meetings, unrelated to the rules, teach and discuss at mandated social events, at an office happy hour for example. (It can happen. I had a client call from a holiday party because they spied an uninvited government official at the party and were calling for guidance on how to kick the government official out. And, my client did kick the government official out.)
- Improving the rules to make sure they are clear. Be critical of rules to assure they are understandable and easy to follow. Be agile enough to quickly fix rules that are hard to follow or that don’t address the problem.
2. Provide employees competent, courageous professionals to help them follow the rules, professionals who:
- Know the rules (the law)
- Can speak and write about the rules in plain English (not in legal mumbo jumbo)
- Can creatively apply the rules instead of delivering an easy “no”
- Listen to what is being said, how it is being said, and what is not being said. (Often, an employee who knows that the “writ” has hit the fan or that it is about to hit the fan, floats a trial question to see if the organization will listen and act.)
- Will give discrete, actionable guidance rather than lecturing or judging
- Are not too busy to answer the questions (in other words hire enough professionals)
- Have the courage to fight for employees trying to follow the rules
- Are rebellious and courageous enough to challenge both ineffective rules and leaders who do not think the rules apply to them
- Will take action to address the issue
3. Develop methods to catch people who don’t follow the rules, for example:
- Have lawyers attend meetings so they can hear who is doing what
- Have lawyers who question what is going on – lawyers who have a spidey sense (So in the Navy situation, when photos keep appearing with Fat Leonard and Navy officers at fun parties and Navy events, someone actually thinks “what’s up with that?”)
- Have controllers, auditors and CFO’s who do the same thing
- Have HR professionals who do the same thing
- Investigate when the spidey sense goes off
- Audit your policies and procedures for compliance – your expense policies, gift policies, hiring and promotion policies, etc.
- Review and audit expense reports and invoices
- Have more than one person sign off on expenses, invoices, entertainment, hiring, etc.
- Review emails randomly for select words (For example hunt for “lap dance”, a phrase that does not come up regularly in most business communications. If nothing else, it may cut down on your business paying for “adult entertainment” and save you some money. And, if you think employees don’t email about unethical behavior and criminal acts… you are wrong – they do.)
4. When the writ does hit the fan:
- Investigate and figure out why
- Then start addressing the above
- Then get rid of leaders who knew or should have known and did not stop it – that gets you one step closer to an ethical and compliant culture, out of the newspapers and out of court.
In the end, the Navy won’t be able to explain why some of their own “deliberately, methodically, and repeatedly” chose dinners, trips, and prostitutes over their career, the Navy and this country but, it should determine why so many could do it for so long, and fix it whatever it was.
A sad and accurate quote from Mark Frost, the creator of the police drama Hill Street Blues as well as many other creative works:
Crime has always been a regrettably consistent element of the human experience.
