Sedona Arizona is known for its four vortexes, some of those alleged places where the universe has holes in it or overlaps (I can’t remember which). I have been to Sedona but I have never experienced such convergence (or the voids for that matter). However, in other ways the universe does seem to converge in the most oddest of circumstances. Two days ago, on 9/11, was the 100th anniversary of the birth of Paul ‘Bear’ Bryant, the legendary college football coach. Bryant is well known for his six national championships at the University of Alabama. But before he made his way to Alabama, he was the head football coach at Texas A&M University. In 1957 he took A&M to the brink of the national championship, leading the nation with an undefeated record until losing the final two games of the season by a combined score of 3 points.
How is this preternatural? The University of Alabama travels to College Station to play Texas A&M University this Saturday. Added to this oddness is the fact that yet another former Texas A&M coach, who actually played for Bryant on that 1957 team – Gene Stallings, won a national championship while the head coach at Alabama in 1992. While Alabama does have the last two national championships under its belt, what A&M has is two wins over Alabama the last two times they played. And, of course, A&M has the reigning Heisman trophy winner – Johnny Football.
The compliance angle? Sometimes things just seem to line up rather eerily. Earlier this week, the FCPA Blog, in a post entitled “China to Fortune 500: Confess, you’ll feel better”, reported that representatives of over 30 western-based firms were gathered in Beijing in July “to receive a stern message from the National Development and Reform Commission (NDRC) division chief, Xu Xinyu.” His warning was that the companies would be well-advised to self-disclose economic crimes, such as bribery and corruption, “before they are found out, or face harsh penalties. He also stated that companies who mount a defence against accusations made by the NDRC would face even stiffer punishment.” His warning would seem to follow the traditional Chinese Communist party tactic of facilitating “self-criticism” and then use this information as a road map to redemption. While of course couched in language and persuasiveness that is unique to China, it would certainly appear as if such steps are akin to self-disclosure and remediation, which are cornerstones of any best practices compliance program.
This convergence is yet another reason that I believe that the GlaxoSmithKline PLC (GSK) corruption scandal in China will be a true game-changer in compliance. We basically have the Chinese government telling companies that they need to self-disclose any violations of Chinese law or face stiffer penalties in an enforcement action. The GSK scandal has demonstrated just how different western and Chinese legal systems and procedures can be. But it does appear that one thing the Chinese want is cooperation. The FCPA Blog reported a Reuters source said that some of the companies who participated in this meeting were known to be “GE, Siemens, Samsung Electronics, Microsoft, Volvo, IBM Corp, Michelin, Swedish packaging giant Tetra Pak, Intel Corp, Qualcomm, Dumex, a subsidiary of Danone, and U.S. cable equipment maker Arris Group Inc.” Further, the “the NDRC has launched nearly 20 probes in the past three years, and has hinted that more investigations into local and multinational firms are in the works.”
The message for the compliance practitioner is clear. If you have operations in China, they need to be scrutinized now. But, equally important, use this teachable moment to demonstrate to management the risks of doing business in jurisdictions with a high perception or preponderance of corruption.
So what will happen at the convergence this weekend in College Station? All I can say is something I never say: GIG’EM AGGIES.
Visit the FCPA Compliance and Ethics Blog, hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and other forms of risk management for a worldwide energy practice, tax issues faced by multi-national US companies, insurance coverage issues and protection of trade secrets.
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© Thomas R. Fox, 2013
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