Weatherford, Bilfinger and Systemic Breakdowns
This is a very complicated case, Maude. You know, a lotta ins, lotta outs, lotta what-have-you’s. And, uh, lotta strands to keep in my head, man. Lotta strands in old Duder’s head. – The Big Lebowski (1998)
Luckily, the Justice Department and SEC’s recent FCPA settlements with Weatherford and Bilfinger do not fall into the Big Lebowski “complicated case” category. They are both examples of cases in which companies suffered systemic compliance breakdowns. Some might call it “brazen,” but I prefer to complicate it a little – both companies engaged in bribery because there was no culture of ethics, and no culture of compliance, let alone basic compliance controls.
I admit my reference to the Big Lebowski may be a little of a stretch (I watched the movie for the first time this weekend and had to include it in today’s posting).
I know it may not provide any comfort to global business executives, attorneys and compliance officers, but the recent FCPA settlements should provide a measure of comfort to companies which are committed to ethics and compliance and making good faith attempts to ensure compliance.
A “big” FCPA enforcement case usually involves companies which have little to no compliance program. After all, the Chief Compliance Officer in the Siemens case was involved in carrying out the vast bribery scheme which led to a record FCPA settlement.
The Wal-Mart case, along with some of the other more significant ongoing investigations, involve bribery which was systemic, occurring in more than one country or region, and often involve continuing attempts to avoid internal detection.
The facts in Weatherford and Bilfinger involve so many red flags that there is no other color to describe the transactions. There is no pretense of compliance; in fact, it is clear that the business decisions were predicated on bribery as a means to secure business and maximize revenues. If a company makes a decision to reject compliance and ethics as part of its business operations, the result will be an enforcement action resembling Weatherford and Bilfinger.
In the Weatherford case, it is no surprise that the company ignored completely export controls and sanctions prohibiting trading with a number of countries. The culture was toxic and Weatherford’s reputation in the oil and gas industry was well known by its competitors.
Weatherford has devoted resources and efforts to create a culture of ethics and compliance. It took its time to resolve the FCPA case to remediate as much as possible before resolving the case. It has put in place a number of positive compliance policies, procedures and resources. Weatherford cleaned house and a number of the bad actors are gone. Only time will tell if Weatherford’s new “culture” has integrated the message of ethics and compliance.